Overnight trading decreases the value of Facebook and Instagram’s owner by $65 billion.

Following the latest Meta earnings reports, Mark Zuckerberg has been necessitated to defend his virtual reality project.

Meta, the company that owns Facebook and Instagram, has lost more than $65 billion (£56 billion) in market value after reporting profits that were cut in half during the q3 of the year as advertisers cut back on spending as a result of the global economic downturn.

The 19% drop in Meta’s share price during after-hours trading reduced Mark Zuckerberg’s personal wealth by an approximate $10 billion. Zuckerberg established Facebook while still in college.

Because the majority of his fortune is in Meta’s shares, Zuckerberg, the company’s biggest shareholder, has seen his net worth fall by $77 billion this year.

As per Bloomberg data, he was worth slightly more than $125 billion at the beginning of 2022, but after Meta’s recent share decline, he is now worth $49 billion.

Meta, that also owns WhatsApp, reported $27.7 billion in revenue for the 3rd quarter, which was significantly greater than analysts expected, despite sales falling 4% year on year.

The company reported a $4.4 billion revenue for the same period, 52% less than the $9.2 billion it made the previous year.

This arose as the company, which has invested heavily in its virtual reality project, the metaverse, alerted of weaker trading in the future.

Meta is struggling as companies cut back on advertising expenditure in the face of increasing competition from TikTok.

Meta’s revenues were the latest in a string of poor earnings reports.

The company has made significant investments in new products that are yet to yield results.

In February, it lost $230 billion in market value, the largest loss in history for an American company after its shares fell by 26%.

As a result of expenditure on the metaverse and its short-form video-content product Reels, Meta’s expenses and costs increased by 19% in the 3rd quarter when compared to the previous year.

Reality Labs, its metaverse division, lost $3.7 billion in the last three months, and the company predicted that losses might “grow significantly year over year” in 2023.

In response to investor concerns regarding the losses, Zuckerberg stated that he was optimistic that expenditure on the metaverse as well as other “experimental bets” would begin paying off.

“Over time, these will turn out to be very crucial investments for the future of our company,” Zuckerberg said.

“We’re doing a portion of the most historic work we’ve ever done.” People will reflect on this in decades and talk about how important the work done here was.”

“Whereas we face near-term earnings challenges, the foundations are there for a return to greater revenue growth,” he appended.

Fears of a downturn as well as rising inflation have harmed Meta and other technology companies. Alphabet, Google’s parent company, and Microsoft have both disheartened investors with 3rd qaurter results.

Furthermore, Meta has continued to struggle with changes to Apple privacy policies enacted in 2021 that undermined its primary advertising model, causing the company to lose out on a predicted $10 billion in advertising revenue in 2022.

According to Sir Martin Sorrell, founding member of digital advertising company S4 Capital, separating Facebook’s business from its metaverse venture might be one way to regain the company’s share price.

“If you can separate Reality Labs, where the metaverse investment is being made, from the Instagram and Facebook platforms.

If those two companies were separated, the market outcome would be very different, and the value of Facebook platforms would most likely increase,” Sorrell told BBC Radio 4’s Today programme.

After initially proclaiming a hiring freeze as well as potential reorganizations in September, Meta did hint at job cuts.

According to the company, it will “hold a few teams flat in terms of staff numbers, shrink others, as well as invest staff numbers growth in only our top priorities.”

“As a result,” it continued, “we expect employee count at the end of 2023 to be roughly in line with third quarter 2022 levels.”

Meta has also anticipated a revenue drop for the year, the first since going public in 2012.

According to Insider Intelligence analyst Debra Aho Williamson, Meta’s third-quarter losses showed that the company had centered too heavily on new ventures.

“When it comes to the present state of its business, Meta is on shaky ground,” she said. “In order to get back to greater growth, Meta must turn its business around.” It would profit from being given less priority.