Facebook’s Outlook on VR
Mark Zuckerberg has jumped over and dodged obstacle after obstacle in creating an empire known as Facebook. From a small social media network into an empire loved by the world. With monetizing his base to understanding mobile growth and how to turn purchases into gold mines, Zuckerberg has done it all and made Facebook stock holders a lot more wealthy in the progress.
Now we all get to watch what he can do with a clumsy looking set of glasses.
Many investors are foaming at the mouth over the many different opportunities this brand-new field can branch off to, however, can the Oculus Rift actually push FB stocks higher as it goes forward?
And if it can’t, will Facebook still have an ability to make money in the future without it?
“For now, Oculus Rift may be getting shipped out to aggressive, couch-bound gamers nationwide, but investors see its potential in the sports world for extra practice reps, or medical field for training, or in hospitals for treating neurological disorders,” says Nicolas Martell, co-founder of financial newsletter Market Snacks.
Zuckerberg looks at the Rift as “a new communication platform,” focusing on the fact that users one day will have the ability to share “not just moments with your friends online, but entire experiences and adventures.”
“Facebook’s support is likely to be what eventually kicks VR and Oculus Rift into mainstream adoption,” Moon says. “Facebook has the full pockets of cash to market and network the Oculus Rift, further grounding its lead, but more importantly it is the epicenter for what could be the app of apps for Virtual and Augmented reality: social media.”
Analysts and economic professionals are projecting a $30 billion market place for virtual reality within the next fourteen years. What this means for Facebook is very much up for discussion, but one thing can be for certain, we won’t know this year.
Yale Bock, a portfolio manager on Covestor and president of Y H & C, a registered investment advisor in Las Vegas, says Facebook has “attractive mobile assets in Instagram, WhatsApp and Oculus,” but notes a few challenges, including monetizing those assets in the future. Valuation is an issue, too.
“Right now, the price seems to be pretty prohibitive,” he says. “The stock is fully priced, to say the least, so a buyer really has to believe in exponential growth of these emerging platforms.”
“Facebook is the lone standout success story in social media,” Sizemore says. “None of the other social media platforms have managed to monetize their user base like Facebook has. And the closest thing Facebook has to a true rival – Twitter (TWTR) – is still something of a niche player. Given that Facebook is only starting to find ways to monetize Instagram, the company should have a lot of healthy growth in front of it.”
“Oculus Rift will likely be more of a 2017-18 event in terms of having a significant impact on Facebook’s revenue because it isn’t fully cooked yet,” says Rob Enderle, technology analyst for Enderle Group. “It ships with one camera and an Xbox controller but needs two cameras and VR controllers that won’t show up until later this year for a full experience. Then there will be months of working through and refining the content and accessories that are needed.” Said Enderle.
“But once fully cooked, this device should transform both gaming and social interaction over a distance and likely change the way we do a number of things, like distance learning and telemedicine,” Enderle says.
“Don’t expect virtual reality to make a real impact on Facebook’s next earnings report,” he says. “Zuckerberg isn’t betting on the Oculus brand or the Rift headset – he’s focused on VR as a platform with a variety of applications as diverse as the random comments in your Facebook news feed.”
“Gamers might embrace it, but I don’t see a lot of people watching movies on their couch wearing a face mask,” he says. “A lot of the consumer innovations of recent years – 3D television, curved screens, etc. — have failed to make much of a splash. I expect this to be mostly a niche product.”
But in the event of Oculus sinking, you can’t count Facebook out as dead just yet.
“Facebook’s stock has skyrocketed as its mobile platform has proved to be far more lucrative than expected,” says JJ Feldman, portfolio manager at Miracle Mile Advisors. “Even if Oculus fails to capture the gaming population, Facebook’s stock should not suffer as the mobile expansion of Facebook’s platform will outweigh the failed headset. In addition to that, Oculus’ purchase price of $2 billion only accounts for about 0.6 percent of FB’s market cap.”
“Looking forward, Facebook has a rosy outlook,” Feldman says. “Analysts expect that the company’s revenue will double in the next two years as better ad targeting capabilities and a rising contribution from Instagram will boost the company’s top line.”