Meta share price collapses after Mark Zuckerberg says he will not give up on the metaverse

Meta’s share price has fallen dramatically after the company reported weak results and Mark Zuckerberg said he would not give up on the metaverse.

Meta’s share price fell through the symbolic $100 mark in pre-market trading on Thursday morning, meaning its value had dropped by almost 25 per cent.

The rapid drop came after Meta reported its latest results, showing weak performances across its various apps, including Facebook and Instagram. But investors appeared to worry even more when Mr Zuckerberg said during a conference call that he would continue to invest even more into the metaverse, despite the negative reaction to its efforts so far.

“Look, I get that a lot of people might disagree with this investment, but from what I can tell, I think this is going to be a very important thing,” he said during the earnings call. “People will look back a decade from now and talk about the importance of the work being done here.”

Mr Zuckerberg has made it very clear that he believes that the company’s future is in augmented and virtual reality, with future social networks involving people communicating in digital spaces while they wear headsets. The company has invested billions of dollars a year into developing both hardware to go onto people’s heads and software worlds in which they can live.

The results of those efforts have been largely mocked, however. Mr Zuckerberg was criticised for the “dead-eyed” and poor quality nature of his metaverse avatar, for instance, and the recent announcement that the company had finally added legs to people’s virtual bodies was met with ridicule.

And though Mr Zuckerberg renamed the company “Meta” rather than Facebook in an attempt to focus on the metaverse, the metaverse does not yet exist in any meaningful form and may not do for years.

“Meta’s latest results paint a picture of a company where all is not well,” Ben Barringer, equity research analyst at Quilter Cheviot said.

“Despite lower expectations after Google and SNAP showed weakness in the digital advertising market, Meta managed to miss estimates and as such the stock is suffering – down 19 per cent in after-hours trading.

“The number showed continued pricing weakness and a weaker-than-expected guide for Q4.

“This all comes on a backdrop of weak global economic growth, competition from TikTok and BeReal for eyeballs and competition from Netflix and Disney+ for advertisers, concerns around the profitability and ROI (return on investment) of the metaverse, and the ever-present threat of regulation.

“The outlook for Meta as a result remains very uncertain.”

Vlad Komanicky, chief executive and founder of marketing advisory firm, Alchemists, said tech experts had been “shocked” by the company’s planned metaverse spend when the VR technology underpinning it “has yet to gain significant traction with consumers”.

He said that, given the current economic climate, an investment “rethink” was needed.

“With B2C [business-to-consumer] markets severely impacted by the cost of living crisis, Meta needs to rethink its operating model and how it invests its available cash,” he said.

“It’s time to focus on efficiency, cutting out inefficiencies, and realistically rethinking investments into new ventures.

“A huge priority for Meta will be to look inward at its operating model, structure and capabilities and whether they are the right ones for the unstable and unpredictable economic climate ahead of us.

“We have left the safe haven of the economic boom, and all companies – this time including cash-rich tech giants – will need to start tightening belts.”

Additional reporting by Press Association