Meta Platforms’ stock rose about 5% on Thursday after reports said CEO Mark Zuckerberg is preparing big changes to the company’s metaverse plans. Executives are discussing cutting the metaverse budget by as much as 30% next year, as reported by Bloomberg.
This includes spending reductions for Horizon Worlds and the Quest virtual reality business. Layoffs could also happen as early as January, although no final decisions have been taken yet.
These discussions were part of Meta’s 2026 budget planning, which included meetings at Zuckerberg’s Hawaii home last month. Zuckerberg usually asks departments to reduce spending by about 10%, the metaverse team may face much deeper cuts because the technology is costly and industry competition is far lower than expected.
Investors have been unhappy about Metaverse
Since Facebook changed its name to Meta in 2021 and invested heavily in building virtual worlds, Reality Labs, which is the division behind the metaverse has lost more than $70 billion.
Both investors and regulators have also expressed concerns, including about children’s privacy and safety in virtual spaces.
Zuckerberg once promoted the metaverse as the future of the company. But since the arrival of ChatGPT in late 2022, the tech world’s attention has moved strongly toward artificial intelligence. Meta is now spending heavily on AI technology and infrastructure, which investors believe could bring better long-term growth. In the September quarter alone, Reality Labs reported an operating loss of $4.4 billion, bringing in only $470 million in revenue.
A day before the stock jump, Zuckerberg announced a new design studio led by former Apple design leader Alan Dye. This shows that Meta still wants to build hardware, but the products will now focus more on AI instead of the metaverse. Meta’s Ray-Ban Meta smart glasses are one example of this shift.
Zuckerberg wrote on Threads: “We’re entering a new era where AI glasses and other devices will change how we connect with technology and each other. The potential is enormous, but what matters most is making these experiences feel natural and truly centered around people. With this new studio, we’re focused on making every interaction thoughtful, intuitive, and built to serve people.”
What happens next?
Because metaverse spending has always worried investors, the news of big cuts brought relief in the stock market. Meta shares were last seen up around 4.666% The stock is now moving closer to its 200-day and 50-day moving averages. Meta’s stock has been weaker than the broader market this year, with only a 9% gain before Thursday’s jump. After a drop following its third-quarter results in October, the shares have slowly begun to recover and this latest update has given investors more confidence that Meta is finally willing to reduce the cost of its metaverse ambitions.
