Meta's hardware division has lost over $70B since 2020
What's the story
Meta's Reality Labs division has posted a massive loss of $4.4 billion in Q3 on $470 million in sales. The unit is responsible for developing VR headsets under the Quest brand and smart glasses with AI capabilities in partnership with EssilorLuxottica, a global leader in eyewear. Since late 2020, Meta's Reality Labs division has racked up over $70 billion in cumulative losses, according to CNBC. This highlights the financial burden of developing VR, AR, and other consumer hardware technologies.
Outlook
Meta expects lower revenue from Reality Labs in Q4
Meta's finance chief Susan Li said that the company expects lower revenue from Reality Labs in Q4 compared to the same period last year. This is because the company did not introduce a new VR headset in 2025. "We're still expecting significant year-over-year growth in AI glasses revenue in Q4 as we benefit from strong demand for the recent products that we've introduced, but that is more than offset by the headwinds to the Quest headsets," Li said.
Strategic shift
Meta Ray-Ban AI glasses with display launched in September
Meta CEO Mark Zuckerberg had unveiled the $799 Meta Ray-Ban Display glasses in September. These are the company's first consumer-ready AI glasses with a built-in display and a wristband featuring neural technology. Meta currently dominates the smart glasses market with a massive 73% share, mostly because the popularity of Ray-Ban Meta AI Glasses (without built-in display). Despite the financial losses, investors are watching closely for any signs of a potential shift in Meta's metaverse strategy.