Investors aren’t sold on Meta’s VR ambitions ahead of its earnings report today

Earnings call in the metaverse… Not quite there yet. All eyes are on Meta, which reports today after the bell. In its June quarter, Zuck’s dorm-room baby had its first-ever drop in revenue since going public as ad sales sagged. While users ticked up, profit tanked 36%. Expectations are low today:

• Sales slump: Analysts expect Meta’s quarterly revenue to come in around $27.5B, which would represent a 5% drop from last year.
• Profit hit: As Meta splurges billions on its meta-ambitions, analysts expect a 42% profit plunge, on average.
• Since expectations are so low and wide ranging, an earnings surprise could boost Meta stock, which this year is down 60% (the S&P 500 is down “only” 20%).

Does the metaverse have legs?... Meta’s avatars still don’t. Meta’s motion-capture leg teaser may be the perfect metaphor for its current conundrum. After spending $15B+ on its meta-revamp, Meta’s struggling to attract users (and even its own employees) to its flagship Horizon Worlds. A few barriers:

• Empty worlds: Horizon Worlds users have been declining since spring, and it now has fewer than 200K, according to documents seen by The Wall Street Journal. Most visitors don’t return after the first month, and most “worlds” are never visited.
• Empty wallets: Horizon Worlds is accessible only through Meta’s pricey Quest VR headsets. Its $1.5K headset may not be the most #relatable Hanukkah gift, but Meta says it plans to expand Worlds to web and mobile.