Peter Kafka

<ul><li>Meta lost an astonishing $16 billion on the Metaverse last year.</li><li>But Wall Street loves Meta late Thursday: Its stock is up another 12%.</li><li>One big reason: Even with the Metaverse losses, Meta's margins are way, way better.</li></ul>

Well, that's still happening: Last year, Meta lost $16.1 billion on its "Reality Labs" division, the group that brings you things like the <a data-link-role-code="open_new_tab" href="https://www.businessinsider.com/what-is-oculus">Oculus goggles</a>. That's up from a loss of $13.7 billion in 2022.

Those losses are accelerating, too: In the last quarter of 2023, Meta lost $4.6 billion on the <a data-link-role-code="open_new_tab" href="https://www.businessinsider.com/facebook-metaverse">Metaverse</a>.

There's more to come, Zuckerberg is promising investors: "For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem," Meta said in its most recent <a data-link-role-code="open_new_tab" href="https://investor.fb.com/investor-news/press-release-details/2024/Meta-Reports-Fourth-Quarter-and-Full-Year-2023-Results-Initiates-Quarterly-Dividend/default.aspx">earnings release</a>.

But this time around, investors seem totally cool with Zuckerberg's Metaverse investments. Meta's stock, which was already at an all-time high, has shot up some 12% on the news.

Here's an easy answer: For starters, Meta says it is going to continue to buy back its stock — something Wall Street always loves — and, for the first time in its history, it's going to start rewarding shareholders with a dividend.

But the bigger picture is that <a data-link-role-code="open_new_tab" href="https://www.businessinsider.com/meta-layoffs">Meta has spent the last couple of years pushing people out the door</a>, getting out of leases, etc. And that has improved the company's bottom line — even while Meta is bleeding red ink on the future.

Last year, Meta spent $3.5 billion shrinking itself. $2.5 billion of that came from "facilities consolidation" — closing and combining offices — and another $1 billion on "severance and other personnel costs" — that is, firing people. The company is now operating with 67,300 employees, a staggering 22% decrease over the last year.

And all of that means that Meta's profit margins are way, way better: While its revenues increased by 16% (a number most Big Tech companies would be very happy with these days), its operating income increased by 62%, and its profits increased by 69%.

And while Zuckerberg and other <a data-link-role-code="open_new_tab" href="https://www.businessinsider.com/tech-new-normal-constant-layoffs-job-cuts-google-amazon-meta-2024-1">Big Tech leaders have said they've been cutting</a> to make their companies more efficient and more dynamic, those bottom-line results are very much the point: They want to show Wall Street that they can still increase profits — even if their go-go growth days are behind them, and even if they're still plowing money into new stuff.

This article was originally published on Business Insider.

Mark Zuckerberg is smiling: Meta's profit margins are much improved — and that's partly because of a shrinking head count.Josh Edelson/AFP/Getty Images ; Isabel Fernandez-Pujol/ BI

Meta lost an astonishing $16 billion on the Metaverse last year. But Wall Street loves Meta late Thursday: Its stock is up another 12%.One big reason: Even with the Metaverse losses, Meta's margins are way, way better.

Meta spent billions to close offices and lay people off. Now we know why.

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Peter Kafka

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Meta spent billions to close offices and lay people off. Now we know why.