Facebook to invest heavily in metaverse after its ad business slumped

By Akshay Kedari  Date: 2021-10-27

Facebook to invest heavily in metaverse after its ad business slumped

Facebook recently announced that it is planning to separate its division that is focused on VR/AR hardware into a new segment, coined as the “metaverse”. The recent development comes after concerns over social media giant’s ad business could drop due to Apple’s privacy changes.

Earlier this month, Facebook warned that Apple’s new privacy reforms could weigh on its ad business significantly during this quarter as the social media giant reported below expectations quarterly revenue.

For the record, Facebook reported revenue of USD 29.01 billion in the third quarter, up from USD 21.47 billion the previous year, but falling short of analysts' expectations of USD 29.57 billion.

The revenue was primarily made up of ad sales and it bore the brunt of Apple's new privacy rules, which made it more difficult for brands to target and measure their ads on Facebook.

It appears that this has compelled Facebook to focus on the metaverse by breaking out its hardware division, beginning the fourth quarter of 2021. Although analysts anticipate a 24.1% increase in fourth-quarter revenue, which could value Facebook at USD 24.84 billion, the social media company expects its

According to Facebook Chief Financial Officer David Wehner, the investment in the form of USD 14.37 billion in stock and USD 40 billion in shares in FRL will help in reducing the company’s operating profit to around USD 10 billion in 2021.

The world’s largest social media company is making this huge financial commitment to build a metaverse while facing allegations from former employee Frances Haugen, who claimed that the company prioritized profit over user safety.

Despite this, in volatile extended trading on Monday, the company's shares were up about 2% at USD 336. Facebook, whose stock has gained by about 20% this year, is about $85 billion away from regaining a spot in the USD 1 trillion club which consists of Apple, Tesla, and Microsoft.

Source credit:

https://www.aljazeera.com/economy/2021/10/25/facebook-pours-billions-in-metaverse-as-ad-business-falters

About Author

Akshay Kedari     aeresearch.net

Akshay Kedari

A qualified computer engineering graduate, Akshay Kedari takes pride in having his way with words. Following his passion for content creation, he writes insightful pieces on aeresearch.net and a few other portals. Also endorsed with a short-term experience in web deve...

Read More

More News By Akshay Kedari

Thermo Fisher claims its tests can detect Omicron variant accurately

Thermo Fisher claims its tests can detect Omicron variant accurately

By Akshay Kedari

The emergence of the Omicron variant of coronavirus, which has forced some countries to once again seal off their borders, is being seen as a catalyst to prolonging the pandemic. The accurate detection of the variant is a major concern, however, Ther...

Motorway obtains unicorn status following a USD 190 Mn Series C funding

Motorway obtains unicorn status following a USD 190 Mn Series C funding

By Akshay Kedari

U.K-based secondhand car auction platform Motorway has reportedly secured USD 190 million in Series C funding round. This has allowed the startup to acquire a unicorn status, with a total valuation of more than USD 1 billion. The funding round was l...

Spotify found testing TikTok-style short vertical video feed in its app

Spotify found testing TikTok-style short vertical video feed in its app

By Akshay Kedari

Spotify is reportedly testing a TikTok-style vertical video feature in its popular music streaming app.  The option will allow users to scroll through the vertical music videos as well as either like them or skip them. Sources claimed that this...

General Motors to deliver Hummer electric pickups starting December

General Motors to deliver Hummer electric pickups starting December

By Akshay Kedari

Edition 1 model of Hummer pickup accounted for 80% of the total reservation. The EV pickup truck boasts a driving range of 329 miles. Automotive giant General Motors Co will reportedly start the delivery of its GMC hummer EV from December onward...

Pokémon GO creator Niantic raises USD 300 Mn to build its own metaverse

Pokémon GO creator Niantic raises USD 300 Mn to build its own metaverse

By Akshay Kedari

Niantic, the creator of the popular Pokémon GO, has reportedly raised USD 300 million from global investment manager Caotue at a valuation of USD 9 billion. The San Francisco-based AR game developer will use the fresh funds to develop a &ldquo...