Facebook pours billions into the ‘metaverse’ as the advertising industry falters | Financial market news


The company’s total revenue, which is mostly made up of advertising sales, reached $ 29.01 billion in the third quarter, from $ 21.47 billion a year earlier, minus analyst estimates at 29. $ 57 billion.

Facebook Inc said on Monday that it will split its hardware-focused and virtual and augmented reality division into a new reporting segment as its core advertising business faces “great uncertainty.”

Facebook has warned that Apple Inc’s new privacy rules will weigh on its digital business in the current quarter, after the social media company reported quarterly revenues below market expectations.

CFO David Wehner said Facebook expects its investment in Facebook Reality Labs (FRL) to reduce its overall operating profit in 2021 by about $ 10 billion.

The financial commitment of the world’s largest social media company to building the metaverse comes as the company is overwhelmed by the coverage of the leaked documents by former Facebook employee Frances Haugen, which she said showed that the company had chosen profit over user safety.

Facebook said Haugen misinterpreted his work.

The company’s shares were trading up about 2% to $ 336 in volatile extended trading on Monday. Facebook, whose shares have gained about 20% so far this year, is about $ 85 billion away from regaining a spot in the $ 1,000 billion club and joining new entrant Tesla Inc.

Facebook said that starting in Q4 2021, it will split FRL, the part of its business that runs on augmented and virtual reality, into a separate reporting segment of its family of apps.

The company expects fourth-quarter revenue to be between $ 31.5 billion and $ 34 billion. Analysts had forecast $ 34.84 billion in revenue, a jump of 24.1%, according to IBES data from Refinitiv.

Its third-quarter revenue was also hit hard by Apple’s privacy rules, which made it harder for brands to target and measure their ads on Facebook.

The company’s total revenue, which is mostly made up of advertising sales, reached $ 29.01 billion in the third quarter, from $ 21.47 billion a year earlier, minus analyst estimates at 29. $ 57 billion.

Facebook said it repurchased $ 14.37 billion in shares in the third quarter and announced an additional $ 50 billion in share repurchases.

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