Meta Platforms (FB), formerly known as Facebook, has made its strategic pivot loud and clear. Across the board, many firms are more than eager to jump aboard the metaverse bandwagon.
Still, some skeptics are going to question CEO Mark Zuckerberg's big move, dismissing it as some sort of diversion from the backlash faced by the social media giant. Undoubtedly, Facebook, Instagram, Messenger, and Whatsapp still pay the bills, and until the metaverse can start producing similar cash flow, there will probably always be more than a fair share of doubters.
In any case, betting big on the metaverse seems like a risky bet with a multitude of upside potential. Such a high-risk, higher-reward proposition is likely worth taking as an investor.
As such, I remain bullish on shares of Meta Platforms, with the stock now around a week away from getting its ticker change to MVRS from FB, making it even more official. (See Analysts' Top Stocks on TipRanks)
Meta More than Willing to Spend MoneyThe metaverse is the real deal, and like it or not, it's coming. Meta is spending a considerable amount of cash on the virtual worlds of the future. It's likely not just going to stop at a $10 billion investment. As the social media segment continues raking it in, even with disruptions brought forth by the latest privacy changes in Apple's (AAPL) iOS software, there's going to be more money to put to work in growth initiatives.
A considerable amount is likely to go towards software and hardware that brings the metaverse to life. It's not going to be cheap. Virtual Reality (VR) has faced many obstacles, but it may finally be ready to go mainstream.
Meta's Reality Labs is hard at work tackling the challenges that have prevented the metaverse from going mainstream many years ago. Indeed, Oculus has been a questionable endeavor thus far. Still, it lays down the foundation for a potential transition into the metaverse. Given Meta's deep pockets and Zuckerberg's vision of the future, the company is likely to throw everything but the kitchen sink to push this sci-fi dream out of the lab and into reality.
With many firms ready to make sizeable investments of their own to get a piece of the metaverse, I don't think that Meta won't have its fair share of challengers.
Undoubtedly, fellow social-media firm Snap (SNAP) could give Meta a good run for its money. Like Meta, it also has its own hardware product with Augmented Reality (AR) spectacles. One has to think the firm is also interested in getting into VR as well with an update to its hardware product at some point down the road.
Competition for Metaverse Share Will Be FierceHardware giants like Apple are hungry for the lion's share of the metaverse. Apple's hardware offering will be tough to stack up against. The company supposedly has a headset with Wi-Fi 6E compatibility in the works and could launch at some point in 2022.
Even if Meta's Oculus offering can't compete with the likes of an Apple mixed-reality headset, Zuckerberg has made it clear that he wants his version of the metaverse to be an open garden. These comments appeared to be subtle jabs at Apple.
That means Meta could still be a major winner, even if consumers opt to use Apple's headsets to access it. Even if Meta doesn't obtain dominant control in the metaverse, it's clear that it'll still make a massive impact, just as its suite of social media offerings have in today's internet.
Wall Street's TakeTurning to Wall Street, Meta Platforms has a Strong Buy consensus rating, based on 29 Buys, six Holds, and one Sell assigned in the past three months. The average Meta Platforms price target of $405.59 implies 15.4% upside potential.
Analyst price targets range from a low of $300 per share to a high of $466 per share.
Disclosure: Joey Frenette owned shares of Apple at the time of publication.
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