Meta Platforms (NASDAQ: META) saw its stock jump more than 6% on Thursday morning after Bloomberg News reported that CEO Mark Zuckerberg is preparing to sharply reduce spending on the company’s metaverse division.
According to the report, Meta executives have discussed potential budget cuts of up to 30% for the metaverse group in 2026. This division includes Meta Horizon Worlds and the Quest virtual reality hardware. Cuts of this scale could lead to layoffs as early as January, although no final decision has been confirmed.
The discussions come as part of Meta’s annual budgeting process, which included a series of meetings at Zuckerberg’s Hawaii residence last month. While Zuckerberg has reportedly asked for about 10% spending reductions across most departments—similar to requests in past years—the metaverse team is facing far steeper cuts.
By midday, Meta shares had trimmed some gains but remained up 3.8% as analysts reacted to the potential shift in strategy.
Lloyd Walmsley of Mizuho reiterated an Outperform rating and maintained his $815 price target on the stock, advising investors to continue building positions. He estimated that cutting metaverse spending at this scale could add roughly $2 per share to Mizuho’s 2026 EPS forecast of $29.50. Reality Labs, Meta’s metaverse division, is currently responsible for losses of nearly $5.85 per share.
Walmsley wrote that such cuts would “significantly increase investor confidence in capital allocation at Meta,” especially if the company confirms them.
He also suggested that reducing metaverse spending could free up capital for Meta’s expanding investments in generative AI. Reality Labs is expected to post almost $18 billion in operating losses this year.
Bloomberg’s sources said Meta has not faced the metaverse competition it initially predicted, making the business less strategically urgent. Most of the planned reductions would likely affect the virtual reality hardware group and the Horizon Worlds platform, which together represent the bulk of metaverse-related expenses.
Walmsley added that investor sentiment toward Meta has been “quite negative” since the third-quarter earnings release, with many U.S. investors feeling “downright despondent” about the company’s spending trajectory.
