Facebook Inc said on Monday it would begin breaking financials for its virtual and augmented reality unit, an announcement that comes as its core advertising businesses face “significant uncertainty”.
After the social media company reported quarterly revenue below market expectations, Facebook warned that new privacy rules from Apple Inc. would impact its digital business in the current quarter.
Chief Financial Officer David Wehner also said that Facebook expects an investment in its hardware division, Facebook Reality Labs, to reduce total operating profit by about $10 billion in 2021.
As a financial commitment by the world’s largest social media company to build the “Metaverse” https://www.reuters.com/technology/facebook-sets-up-new-team-work-metaverse-2021-07-26 The company has been affected by the coverage of leaked documents by former Facebook employee and whistleblower Frances Haugen, in which she said the company chose advantage over user safety.
Chief Executive Officer Mark Zuckerberg has said that in the coming years Facebook will be seen as a metaverse company rather than a social media company, as it makes several investments to expand the technology.
The metaverse, a term first coined three decades ago in a dystopian novel, has attracted much discussion in Silicon Valley. It broadly refers to a shared virtual environment that can be accessed by people using different devices.
Facebook, which has invested heavily in virtual reality (VR) and augmented reality (AR), including companies like Oculus, this year formed a product team to work on the metaverse. This month, it said it planned to hire 10,000 employees in Europe over the next five years to work on the initiative.
Wehner said that from the fourth quarter of 2021, it will break out FRL as a separate reporting segment from Facebook’s family of apps.
Shares of the company were trading at $336, up about 2% in extended trading on Monday. Facebook, whose shares have risen nearly 20% so far this year, is about $85 billion away from securing a spot in the $85 billion club and joining new entrant Tesla Inc.
The world’s largest social media network is under scrutiny from global lawmakers and regulators, including the Federal Trade Commission, which has filed an antitrust lawsuit alleging anti-competitive practices.
The whistleblower documents, first reported by the Wall Street Journal, have intensified the investigation into the company. They include internal research and reports about the effects of Instagram on the mental health of adolescents and whether its platform incites division, as well as its handling of the activities surrounding the January 6 Capital riots and users around the world. For includes discrepancies in the company’s content moderation.
Reuters reported on Monday that Facebook employees have warned that the company has failed to police rule-breaking content in countries where it has led to former employees, according to a cache of disclosures made to the US Securities and Exchange Commission and Congress. Most likely to cause damage. by Haugen.
Facebook said it expects fourth-quarter revenue to be between $31.5 billion and $34 billion. Analysts had forecast a $34.84 billion or 24.1% jump in revenue, according to data from Refinitiv’s IBES.
Its third-quarter revenue also bore the brunt of Apple’s privacy rules, making it harder for brands to target and measure their ads on Facebook.
Daily active users, a metric closely watched by advertisers and investors, rose 6% from a year ago to 1.93 billion, matching expectations.
The company’s total revenue, which primarily includes ad sales, rose to $29.01 billion in the third quarter, up from $21.47 billion a year ago, missing analysts’ estimates of $29.57 billion.
Facebook said it repurchased $14.37 billion in stock during the third quarter and announced an additional $50 billion in share buybacks.
The company did not announce any new names as part of the expected rebranding effort. In response to the Verge’s report on its name-change plans last week, Facebook said it does not comment on “rumours or speculation.”
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