Report: Meta planning massive cuts to Reality Labs metaverse division

Tech giant Meta is reportedly looking to make cuts in its Reality Labs metaverse division, the home of the Quest VR headest and the Horizon Worlds platform.

That’s according to Bloomberg, which reports that execs at the company are eying up budget reductions of as much as 30% during 2026. Layoffs might be take place as early as January.

The company is planning cuts across the board, but more extensively to the metaverse division because it has not seen significant competition in the space, according to sources speaking to Bloomberg. Investors and analysts have been demanding the company reduce its heavily lossmaking investments in the sector, which run at billions of dollars per quarter.

The firm is reportedly not looking to abandon its metaverse plans, but is moving the money it is saving with these cuts into its augmented reality glasses, currently produced in partnership with Ray-Ban, according to additional reporting by the New York Times.

“Within our overall Reality Labs portfolio, we are shifting some of our investment from Metaverse towards AI glasses and wearables, given the momentum there. We aren’t planning any broader changes than that,” a Meta spokesperson told the FT.

Following the Bloomberg report, the company’s stock shot up 5.5% when the markets opened on Thursday morning, suggesting investor approval for the changes. Meta’s share price ended the day 3.4% higher.

In February 2025, Meta disclosed that despite its Meta Quest hardware yielding $1.08 billion in revenue, the Reality Labs division recorded a $4.97 billion loss. This part of the company has been in the red for much of its existence and lost over $70 billion since the company pivoted to focus on the metaverse.

For the three months ending September 30, 2025, Meta reported a $4.4 billion operational loss – largely in line with the previous year’s figures – while for the nine months ending September 30th, this loss comes to $13.2 billion, a 3% increase year-on-year.

Meta CFO Susan Li told investors that the company expected lower Reality Labs revenue for its Q4, which ends on December 30, 2025.

Facebook rebranded as Meta Platforms back in 2021, such was Zuckerburg and co.’s conviction that the metaverse was the future of digital communication.

Despite Meta’s more recent focus on AI, the company announced last month that it was cutting 600 jobs from its Superintelligence Labs division.

The cuts would be the latest in a series of significant job losses at the company. In January of this year, Meta cut 5% of its workforce, estimated to be around 3,600 staff, while in 2023, it laid off 10,000 workers and retired 5,000 open roles.