To The Moon

In The Beginning.

In 2021, Mark Zuckerberg recast Facebook as $Meta Platforms, Inc.(META)$ and declared the metaverse, the company’s next great frontier.

He framed it as the “successor to the mobile internet” and said Meta would be “metaverse-first”, whatever that means.

The Definition.

Metaverse is supposedly a digital realm where people would work, socialize, and spend much of their lives.

It sounds so futuristic and technologically advanced, 4 years ago when Metaverse concept was first promoted.

The hype was not all Zuckerberg though.

Grayscale, the investment firm specializing in crypto, branded Metaverse a trillion-dollar revenue opportunity.

Barbados (country) even opened an embassy in Decentraland, one of the worlds in the metaverse. 

The Reality Check.

Almost 5 years later, that bet has become one of the most expensive misadventures in tech.

According to Bloomberg, Meta’s Reality Labs division has racked up more than $70 billion in losses since 2021, burning through cash (like 7th month hungry ghost festival), on:

• Blocky virtual environments.

• Glitchy avatars.

• Expensive headsets.

• User base of approx 38 people as of 2022.

For many, the main issue is the value proposition is unclear.

Metaverse simply does not deliver a must-have reason for people to ditch their phone or laptop.

Despite years of investment, virtual reality (VR) remains burdened by serious structural limitations, and for most users there’s simply not enough compelling content beyond niche gaming.

The 30% Budget Cut 

Bloomberg said:

• CEO Zuckerberg is preparing to slash Reality Labs’ budget by as much as -30%,

• The cuts, that could translate to $4 - $6 billion in reduced spending, would hit everything from the Horizon Worlds virtual platform to the Quest hardware unit.

• Layoffs could come as early as January 2026, though final decisions haven’t been made. 

The move follows a strategy meeting in November 2025 at the CEO’s Hawaii compound.

During the meeting,

• Zuckerberg reviewed Meta’s 2026 budget.

• Asked executives to find -10% cuts across the board.

• Reality Labs told to go deeper in its cut.

Competition in the broader VR market never took off, the way Meta expected.

The result: a division long viewed as a money sink is finally being reined in.

As of 04 Dec 2025

Wall Street cheered. Meta’s stock jumped by +3.43% on Thu, 04 Dec 2025 on the news, adding roughly $69 billion in market value.

On Fri, 05 Dec 2025, Meta jumped a further +1.8%, allowing Meta to close on a weekly high of +5.39% or $673.42 per share. (see above)

Technical Analysis.

With its moving averages (ma) of 20-day, 50-day & 200-day all below its closing price, it signals short-term bullish momentum after a recent rebound.

Coupled with an RSI reading of 56.41, it shows moderately positive momentum, implying Meta has room to move either higher or into further consolidation without extreme overbought risk.

Huber Research, MD & Founder, Craig Huber commented:

• Investors have been complaining for years that the metaverse effort was an expensive distraction, one that drained resources without producing meaningful revenue.

• Overall, a smart move by Meta, just late.

Metaverse is out, Artificial Intelligence is in

According to a Meta spokesperson:

• The company is not killing the metaverse outright.

• It is shifting some investments from Metaverse toward AI glasses and wearables.

• Citing momentum behind its Ray-Ban smart glasses, that have tripled in sales over the past year.

There is no avoiding the reality: AI is the new obsession, and the new money pit.

Meta expects to spend around $72 billion on AI this year, nearly matching its accumulated losses from metaverse since 2021.

That includes:

• Massive outlays to build data centers.

• Modelling development.

• New hardware.

Comparatively speaking, Meta investors are more excited about AI burn than metaverse burn. Even then, they want clarity on (a) how much Meta will ultimately be spending (on AI) and (b) for how long ?

Meta’s peers (the Magnificent 7 groupie) are pursuing similar due diligence:

• $Apple(AAPL)$ is revamping its leadership structure, partially around AI concerns or its lack thereof.

• $Microsoft(MSFT)$ is rethinking the “economics of AI”

• Amazon, Google, & Microsoft are pouring billions into cloud infrastructure to keep up with demand.

It is clear to see — money-losing initiatives with no clear AI-angle will be on the chopping block, with Meta as a dramatic but salient example.

Interestingly, during Meta’s most recent earnings call, executives did not use the word “metaverse” once.

Mind The Gap.

Reality Lab’s budget cut of about $1.3 billion per quarter (30% of $4.43 billion quarterly spent by Reality Lab), will go some way to mitigate Meta’s operational loss gap, by “improving” operating margin.

It would not fix Meta’s earnings shortfall, that is mainly due to massive AI-related Capital Expenditures (CapEx).

What is known so far is AI-related spending:

• For FY 2025, has been revised upwards to $70 - 72 billion, from earlier budgeted $66 - $72 billion.

• For FY 2026, CFO Susan Li has confirmed that (a) CapEx dollar growth will be notably larger than 2025’s and (b) expenses will grow at a significantly faster percentage rate in 2026.

Let’s not forget the no expense was spared talent acquisition, by Zuckerberg to form his ultimate “dream” team for the new Meta Superintelligence Labs (MSL) division.

For now, it included:

AI Super Intelligence Architects.

• Alexandr Wang, Founder & CEO, Scale AI (Meta also invested $14.3B). He has been appointed as Chief AI Officer to lead MSL.

• Nat Friedman, Former CEO, GitHub. Co-leads of MSL, with focus on AI products and applied research.

• Pang Ruoming, ex-Head of AAPL’s Foundation Models Team. A distinguished engineer who led AAPL's core AI models team.

• Ke Yang, ex-Head of AAPL’s AKI Team. He used to lead AAPL’s search independence and Siri efforts.

AI Researchers (The Core Talent)

• Jack Rae, ex-Google DeepMind Lead researcher.

• Jason Wei, ex-OpenAI Prominent researcher.

• Yuanzhi Li, ex-OpenAI researcher.

• Hyung Won Chung, ex-OpenAI researcher.

• Andrew Tulloch, co-founder of Thinking Machines Lab (with Mira Murati).

Above talents ‘acquired’ will spearhead Meta’s (serious) foray into all things AI.

Zuckerberg has dangled ‘high’ salaries to attract these talents.

What can they bring to the table, to propel Meta in the next leap forward, when (again) both use case and value proposition for Meta’s AI adoption is still muddy.

Will it be a case of metaverse-déjà vu all over again? Only time will tell.

How long more is Meta going to keep Reality Lab running before shutting it down completely and for Zuckerberg to re-recast company’s name back to Facebook?

Due to creative differences and bias, I will scale back my posting.

My 2,430 ‘timeless’ posts remain available (for now) for those who value fundamentals as Mr Buffett had pointed — invest in businesses, not pick stocks.

To new subscribers, no flashy screens to entice blind investing. I aim to share on how to fish, not fish for you.

I’m grateful to share what I know. In the alternate moo moo universe, where I am valued & appreciated, I will still be sharing. Good luck on your i-journey.

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• Burry vs Musk : Who Wins This Round ?

• US Economic Reports - Fed's Focus Before FOMC ?

• NU : Bank Stock To Have and To Hold !

• Do you think Meta has a clear vision on how to apply AI to its suite of products and bring value to users, like Google?

• Do you think, Meta’s new AI-dream time will be able to bring the company to the next level ?

If you find this post interesting, give it wings! ️ Repost and share the insights ?

Do consider “Follow me” and get firsthand read of my daily new post. Thank you.

@Daily_Discussion

@TigerPM

@TigerStars

@Tiger_SG

@TigerEvents