Meta’s Reality Labs loses $3.7 billion in third quarter as Zuckerberg’s big bet keeps bleeding cash
Mark Zuckerberg, CEO of Meta Platforms, demonstrates the Meta Quest Pro during the virtual Meta Connect event in New York on Oct. 11, 2022.
Michael Nagle | Bloomberg | Getty Images
Meta continues to push the metaverse as the future. In the present, it keeps racking up losses.
In its third-quarter earnings report Wednesday, Meta revealed that its Reality Labs unit, which develops metaverse-related technologies, recorded a $3.74 billion operating loss.
Revenue in the virtual reality and augmented reality division dropped 26% from $285 million a year earlier to $210 million. Analysts were expecting sales of $299.3 million and a $3.9 billion operating loss, according to StreetAccount.
Facebook founder and CEO Mark Zuckerberg changed the company’s name to Meta two years ago, declaring the metaverse “the next frontier.”
While Meta is pouring billions of dollars a quarter into VR and AR to try and turn Zuckerberg’s dream into a reality, the market remains nascent. Developers who attended Meta’s recent Connect conference for mixed reality told CNBC that Apple’s upcoming entry into the VR market could catalyze the industry and push it into the mainstream.
Meta debuted its Quest 3 VR headset in September, pitching it as a technically superior version of the older Quest 2 device. The new product contains an improved “passthrough” feature that creates more of a mixed reality experience.
The Quest 3 has a starting cost of $499, which is $200 more than the Quest 2 but $500 cheaper than the high-end Quest Pro VR headset.
The company is positioning its Quest headsets as a more affordable way for people to experience VR compared to Apple’s upcoming Vision Pro mixed reality headset, which will cost $3,499 when it debuts next year.
In June, Meta debuted the Meta Quest+ VR subscription service for users who want to access two new games each month. The subscription service costs $7.99 a month and works with the Quest 2, Quest Pro and Quest 3 VR headsets.
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CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit, at Carnegie Mellon University in Pittsburgh, Pennsylvania, U.S., July 15, 2025.
Nathan Howard | Reuters
It’s been a tough November for Palantir.
Shares of the software analytics provider dropped 16% for their worst month since August 2023 as investors dumped AI stocks due to valuation fears. Meanwhile, famed investor Michael Burry doubled down on the artificial intelligence trade and bet against the company.
Palantir started November off on a high note.
The Denver-based company topped Wall Street’s third-quarter earnings and revenue expectations. Palantir also posted its second-straight $1 billion revenue quarter, but high valuation concerns contributed to a post-print selloff.
In a note to clients, Jefferies analysts called Palantir’s valuation “extreme” and argued investors would find better risk-reward in AI names such as Microsoft and Snowflake. Analysts at RBC Capital Markets raised concerns about the company’s “increasingly concentrated growth profile,” while Deutsche Bank called the valuation “very difficult to wrap our heads around.”
Adding fuel to the post-earnings selloff was the revelation that Burry is betting against Palantir and AI chipmaker Nvidia. Burry, who is widely known for predicting the housing crisis that occurred in 2008 and the portrayal of him in the film “The Big Short,” later accused hyperscalers of artificially boosting earnings.
Palantir CEO Alex Karp vocally hit the front lines, appearing twice in one week on CNBC, where he accused Burry of “market manipulation” and called the investor’s actions “egregious.”
“The idea that chips and ontology is what you want to short is bats— crazy,” Karp told CNBC’s “Squawk Box.”
Despite the vicious selloff, Palantir has notched some deal wins this month. That included a multiyear contract with consulting firm PwC to speed up AI adoption in the U.K. and a deal with aircraft engine maintenance company FTAI.
But those announcements did little to shake off valuation worries that have haunted all AI-tied companies in November.
Across the board, investors have viciously ditched the high-priced group, citing fears of stretched valuations and a bubble.
In November, Nvidia pulled back more than 12%, while Microsoft and Amazon dropped about 5% each. Quantum computing names such as Rigetti Computing and D-Wave Quantum have shed more than a third of their value.
Apple and Alphabet were the only Magnificent 7 stocks to end the month with gains.
Sill, questions linger over Palantir’s valuation, and those worries aren’t a new concern.
Even after its steep price drop, the company’s stock trades at 233 times forward earnings. By comparison, Nvidia and Alphabet traded at about 38 times and 30 times, respectively, at Friday’s close.
Karp, who has long defended the company, didn’t miss an opportunity to clap back at his critics, arguing in a letter to shareholders that the company is making it feasible for everyday investors to attain rates of return once “limited to the most successful venture capitalists in Palo Alto.”
“Please turn on the conventional television and see how unhappy those that didn’t invest in us are,” Karp said during an earnings call. “Enjoy, get some popcorn. They’re crying. We are every day making this company better, and we’re doing it for this nation, for allied countries.”
Palantir declined to comment for this story.
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