Metaverse Dream Over? Meta to Downsize Virtual Reality Team, Stock Price Rises Over 3%

Facebook founder Mark Zuckerberg’s long-standing metaverse project is set to have its resources significantly slashed? According to Bloomberg, Meta may cut back on its metaverse project as soon as January, including layoffs, and will shift resources to AI glasses and other wearable devices. Meta’s stock price rose 3.43% yesterday, closing at $661.53.

Facebook may cut back on its metaverse project as soon as January, including layoffs

According to Bloomberg, the metaverse project, once seen by Zuckerberg as the company’s future and boldly prompting the name change from Facebook to Meta, is rumored to face up to a 30% budget cut as early as January next year, including layoffs.

Sources revealed that the metaverse team was asked to further reduce spending this year, and the proposed cuts are likely to target Meta’s virtual reality team, which accounts for the majority of metaverse-related expenses. In addition, Horizon Worlds will also face cutbacks.

The metaverse team belongs to Reality Labs, a Meta division focused on long-term investments such as VR headsets and AR glasses. Since early 2021, the team has lost more than $70 billion. Zuckerberg has largely stopped mentioning the metaverse in public and on earnings calls, instead focusing on developing large AI models supporting AI chatbots and other generative AI products, as well as hardware products more closely related to these experiences, such as Meta’s Ray-Ban smart glasses.

Resources will be focused on AI glasses and other wearable devices

Meta has confirmed the reduction of resource investment in metaverse projects and stated that the saved funds will be used for other future projects within the Reality Labs division, including AI glasses and other wearable devices.

“In view of the momentum in AI glasses and wearables, we are shifting some investments from metaverse projects to these areas. Beyond this, we have no broader adjustment plans.”

Meta stock jumps over 3%, but performance still lags the broader market this year

The entire metaverse project has attracted close attention from investors and regulators. Investors believe the project consumes resources, while regulators claim that children’s privacy and safety are at risk in the virtual world.

Some analysts and investors have long called for Zuckerberg to divest Reality Labs products, as these products continuously consume resources with little return. In April this year, Forrester vice president Mike Proulx predicted that Meta would shut down its metaverse projects, such as Horizon Worlds, by the end of the year. This would allow the company to focus more on its AI projects, including Llama, Meta AI, and AI glasses.

Meta’s stock price climbed 3.43% yesterday, closing at $661.53. Recently, Meta’s stock performance has been lackluster, rising 12% so far this year, below the S&P 500’s 16%.

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