By Elizabeth Culliford

(Reuters) – Facebook (NASDAQ) has renamed its company since October. It expresses a vision for the internet in which people can connect digitally through virtual-reality avatars and teleport to places such as ancient Rome. This helped spark the metaverse investing craze.

Investors will have a chance to see the impact that CEO Mark Zuckerberg has on the business, Meta Platforms Inc., when they report fourth quarter results.

Meta will release the Reality Labs results from its virtual and augmented reality hardware unit Reality Labs for the first-ever time. This is an investment that the company had previously said would result in a 10 billion loss to 2021 profits and not being profitable.

In order to create the metaverse, Zuckerberg believes that it will become the next generation of the internet. The company plans to buy multiple virtual reality gaming studios and hire engineers.

Analysts stated that they are interested in indicators regarding the Reality Labs’ profitability and how it may affect the advertising side. They also want evidence about VR headset sales.

VoxPop’s VR market analyst Stephanie Llamas stated, “It will be enormous for me as an Analyst. I won’t have to surgically dig into Facebook earnings…and just see a Lens into the Reality Labs.”

Meta stated that it expected non-advertising revenues to drop year over year in the fourth quarter. This is due to the unfavorable comparison with its VR Quest 2 headsets’ strong launch during last year’s holiday season.

Quest headsets have not been released by the company, although a July recall notice about Quest 2 facial foam liners stated it had damaged approximately 4,000,000 units in the United States. Oculus, the company’s Oculus app, ranked first in the U.S. App Store on Christmas Day.

‘SIGNIFICANT UNCERTAINTY’

Investors will want to know how Meta’s digital advertising core is doing after it said that in October, there was “significant uncertainty”.

It is the company with the second-largest global digital ad network after Alphabet Inc (NASDAQ) Inc.’s Google. The company warned it might continue to face hits from Apple Inc. (NASDAQ:)’s privacy modifications which made it difficult for brands target and measure ads on Meta’s social networks Facebook and Instagram. Although analysts said Meta had set a low bar for future earnings, there were still questions about the effects of these changes and the COVID-19 pandemic.

Mark Mahaney, Evercore ISI analyst said that “The Apple tracking changes clearly had a detrimental impact on Facebook during the September quarter.” It is unclear if they were able to mitigate the risk further or did it get worse.

Global X analyst Pedro Palandrani said that the metaverse is the “long-term story”. However, investors will be looking for Meta’s ability to navigate Apple’s policies and e-commerce updates. They also want ways to monetize messages or features such as its Reels short video offerings.

Meta reported 2020 revenues of $86 billion. However, it has not yet explained in detail how the company will earn money in metaverse. It highlighted potential business opportunities, including immersive shops and the possibility of running mixed reality events for paid brands in November. A group of advertising executives has been invited by the company to talk about its brand changes and plans for metaverse in a virtual roundtable.

Wall Street estimates that Meta would report revenue at $33.38 Billion. That’s an increase of 18.9% over the previous year. Meta expects to earn $3.84 per share in its quarterly earnings, which is slightly lower than last year. According to the company, total expenses for 2021 will be between $70 billion and $71 billion while full-year expenses for 2022 will reach $91 billion to $97 billion.