Meta's Reality Labs division reported a $4.6 billion loss in the second quarter of 2026, raising cumulative losses since the end of 2020 to approximately $88 billion, according to Meta's earnings report.
This follows a $4 billion loss in Q1 2026 and persists despite Meta reducing
its virtual reality initiatives earlier this year, including moving its main VR app, Horizon Worlds, into maintenance mode. Reality Labs generated $402 million in revenue in Q1 and $431 million in Q2.
Meta reported an overall profit of $15.8 billion in Q2, a decrease of approximately 13% year over year.
Reality Labs Losses Continue After VR Retrenchment
Meta eliminated hundreds of positions from Reality Labs and placed Horizon Worlds into maintenance mode after the division reported a $6 billion loss in January, bringing total losses since Q4 2020 to $80 billion at that time.
While quarterly losses have decreased, they continued with $4 billion lost in Q1 2026 and $4.6 billion in Q2, raising the cumulative total to approximately $88 billion.
The Q2 earnings report emphasizes Meta's AI and smart glasses initiatives, with Reality Labs losses reported alongside these priorities. The data suggests Meta has shifted focus toward AI but remains involved in shared virtual reality.
Mark Zuckerberg previously justified significant metaverse investments by projecting the sector could be worth trillions by 2030. A 2023 Meta-commissioned report estimated that virtual reality headsets used for work and recreation could add $760 billion to US GDP by 2035.
Meta shifted its focus to generative AI, resulting in job reductions and moving Horizon Worlds into maintenance mode.
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