ServiceNow CEO (NOW) Bill McDermott has seen several tech investing cycles in his career, and he’s confident that Mark Zuckerberg’s metaverse has a place in the future of living.
“I think there’s a real place in the world for the metaverse,” McDermott said on Yahoo Finance Live (video above). “It’s true. But even if you spend time in the metaverse, you always have to come back to Earth, where real people live, and actually execute your business plan.”
McDermott, who previously served as SAP’s longtime CEO, explained that the metaverse will help drive consumer and enterprise spending.
“You always see this interdependency between the metaverse world and the real world, where business takes place,” McDermott added. “And that’s where we come in. We play both places.”
Currently, investors do not share McDermott’s passion for the metaverse.
Meta (META) stock fell 22% on Thursday as the owner of Facebook and Instagram continues to spend aggressively to build its metaverse. Execs have signaled that the blistering pace of spending will continue through 2023.
The social media platform’s structured spending will increase about 13% year-over-year for fiscal year 2023, which is higher than the Street’s forecast of 7%.
“With a new CFO in place, some may argue that the company is too conservative,” Benjamin Black, analyst at Deutsche Bank, wrote in a note to clients. “And while the Meta is usually going down [operating expenditure] full-year guidance (as they have done year to date), the high cost outlook is the wrong number at the wrong time for investors.”
Meta’s revenue outlook isn’t too bright either: Fourth-quarter revenue guidance came in between $30 billion and $32.5 billion, while Wall Street was expecting $32.2 billion.
Although Meta has announced that it will continue Reality Lab investments after 2023, the company acknowledged that spending will be higher next year.
“Meta’s results are an absolute train wreck that speaks to the pervasive digital advertising doldrums ahead for Zuckerberg & Co. as they make risky and head-scratching bets in the metaverse,” said Wedbush analyst Dan Ives to clients on a note.
Brian Sozzi is an editor-at-large and anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and in LinkedIn.
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