"Last year, one of the better performers among the Magnificent 7 was Meta Platforms Inc. ( NASDAQ: META). But its third-quarter earnings report raised investor concerns about the company's massive capital spending on artificial intelligence initiatives. In addition, Meta said it planned to make significant cuts to the budget of its Reality Labs metaverse division in the coming year. The stock is down 10.9% since the quarterly report was released."
"The share price hit an all-time high of $796.25 back in August. The stock is still trying to recover from the pullback in November, and it is now up fractionally year over year, underperforming the broader market. Furthermore, the near-term future of the economy is uncertain-just like the markets themselves-and Meta Platforms CEO Mark Zuckerberg is a controversial figure. Certainly, Zuckerberg's sudden shift to the metaverse and brand name change to Meta Platforms raised a few eyebrows several years ago."
"Let's start by addressing the elephant in the room. Investors should not rely on Meta Platforms' Reality Labs metaverse business to drive the company's near-term future growth. In the fourth quarter of 2025, Reality Labs generated $955 million in revenue, or a 12% year-over-year decline. During that same time frame, Reality Labs recorded a loss from operations of $6.02 billion, and the CFO projected that loss in 2026 would be similar to 2025 levels."
Meta Platforms showed strong earlier 2025 results but a third-quarter report raised investor concerns about massive AI capital spending and prompted planned Reality Labs budget cuts. The stock fell 10.9% since the quarterly report, remains only marginally higher year-over-year, and underperformed the broader market after an August all-time high and a November pullback. Macro and market uncertainty combine with CEO Mark Zuckerberg's controversial reputation and past pivot to the metaverse. Reality Labs generated $955 million in Q4 2025 revenue, a 12% year-over-year decline, and recorded a $6.02 billion operating loss with similar losses projected for 2026.
Read at 24/7 Wall St.
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