Meta Stock: Metaverse Dream Gets a Reality Check with 1,500 Layoffs

TLDR

• Meta is cutting around 10% of its Reality Labs workforce, affecting approximately 1,500 employees out of 15,000 staff members in the metaverse division.
• The layoffs reflect Meta’s strategic shift from metaverse development to artificial intelligence as the company reallocates resources between divisions.
• Reality Labs has accumulated over $70 billion in losses since launching in August 2020, with $4.4 billion in operating losses reported in Q3 2025.
• Meta plans to redirect some metaverse funding toward its wearables division, which includes smart glasses and devices like the Meta Neural Band.
• User adoption has remained weak, with reports suggesting Horizon Worlds attracts fewer than 900 daily active users while blockchain metaverses see minimal engagement.

Meta is preparing to lay off roughly 10% of its Reality Labs employees this week. The cuts could be announced as soon as Tuesday, according to the New York Times.

Meta Platforms, Inc., META

The move affects Meta’s metaverse-focused division. Reality Labs employs around 15,000 people who work on virtual reality hardware and software.

About 1,500 employees are expected to lose their jobs. The division develops VR headsets and operates virtual platforms including Horizon Worlds and Horizon Workrooms.

Meta declined to comment on the report. The company has been gradually reducing its metaverse investment over the past year.

In early December, Meta’s stock price jumped after reports emerged about potential budget cuts. The company was considering slashing up to 30% from its metaverse spending.

Those funds would be redirected toward artificial intelligence development. The latest report indicates some Reality Labs money will move to Meta’s wearables business instead.

The wearables division focuses on smart glasses and wrist-worn devices. One product in development is the Meta Neural Band.

The Financial Toll of Virtual Worlds

Meta changed its name from Facebook in October 2021. The rebrand signaled a major strategic shift toward virtual reality and augmented reality.

Reality Labs launched in August 2020. Since then, the unit has lost more than $70 billion.

The division posted $4.4 billion in operating losses during Q3 2025. Those figures appeared in Meta’s most recent earnings report.

The metaverse market has seen uneven user engagement overall. Gaming platforms like Roblox and Fortnite attract hundreds of millions of daily users.

Most other metaverse projects struggle with adoption. Blockchain-based virtual worlds have particularly low activity levels.

The Sandbox recorded just 776 unique active wallets over 30 days. That data comes from DappRadar tracking.

User Numbers Tell a Tough Story

Some reports suggest Horizon Worlds attracts fewer than 900 daily active users. The platform launched with high expectations but failed to gain mainstream traction.

Meta CEO Mark Zuckerberg previously called 2025 a “pivotal year” for the metaverse. He has maintained public support for the technology’s long-term potential.

The company’s strategic pivot comes as AI competition intensifies across the tech industry. Meta faces pressure to keep pace with rivals investing heavily in AI infrastructure.

The Reality Labs cuts represent the latest workforce adjustment at Meta. The company has implemented several rounds of layoffs over the past few years.

The budget reallocation affects how Meta distributes its resources. The company appears to be prioritizing AI development and wearables over virtual world platforms.

Meta declined to provide specifics about which Reality Labs positions would be eliminated. The company has not announced whether the cuts will affect specific product lines or geographic regions.

The layoffs are expected to be announced Tuesday, according to sources familiar with the matter.

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