Meta has lost over 73 billion on a failed VR dream

When Mark Zuckerberg called VR and the metaverse “the future of the internet” a few years ago, the ambition was that Meta would set the tone for an entirely new platform.

The reality, however, has evolved differently. Meta’s VR division, Reality Labs, has never made money and now stands as a symbol of a strategy that has not delivered anywhere near the promised results.

Since the venture began, Reality Labs has lost a total of around USD 73 billion.

The last few quarters have not changed the picture. In the third quarter of 2025 alone, losses in the VR business amounted to approximately USD 4.4 billion, even though headset sales actually increased as retailers stocked shelves for the Christmas sales.

At the same time, consumers have not embraced VR equipment on a large scale. Many are opting for lighter solutions with mobile AR and smart AI functions rather than heavy glasses and entire virtual universes.

Even an expensive launch like the Apple Vision Pro hasn’t triggered the mass market that the entire industry was talking about a few years ago.

Zuckerberg cuts to the bone

The external pressure has taken its toll. According to Yahoo Finance, Meta has now decided to cut Reality Labs’ budget by around 30 percent.

Several projects at the more experimental end of the spectrum are being put on hold, and funds are being shifted towards areas such as AI infrastructure, Reels and the classic ad business.

This is happening at the same time as Meta is delivering strong financial results for the company overall.

In the third quarter, revenue increased to just over USD 50 billion, driven almost exclusively by ads on Facebook and Instagram.

Revenues from VR also increased, but from a low level and cannot offset the huge development costs.

The bottom line result was much more modest. A large, one-off tax item sent net profit down significantly.

On an adjusted basis, however, Meta continued to perform well, generating just over USD 9 billion in free cash flow in the quarter with a cash balance of around USD 37 billion.

Costly VR fiasco

Even with the big losses on VR, Meta is still one of the world’s most valuable technology companies and the stock is trading at a high price relative to earnings.

Analysts point out that investors are paying a premium because they expect continued growth in the advertising business and new revenues from AI products, but that there is little room for disappointment.

As a result, several banks have adjusted their price targets, but most maintain a buy recommendation.

The argument is that Meta has several strong revenue streams, very high gross margins and now also the willingness to slim down the most costly VR projects.

At the same time, the company continues to buy back its own shares and pay dividends worth several billion dollars per quarter.