Oculus VRs Potential Is Underappreciated By The Market… Buy Meta Platforms

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Virtual reality is a much bigger deal than most investors believe, and that means a huge opportunity.

App Store rankings for software downloaded during the Christmas holiday were revealed on Tuesday. The most downloaded app was Oculus, which was software for Meta Platform (FB) virtual reality headset.

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Investors should ignore the haters and buy the meta platform.

Oculus should be familiar. According to Chief Executive Officer Mark Zuckerberg, the VR headset is at the heart of an ambitious plan for Meta Platforms, an alternative digital reality where people will eventually work, play games and interact. in a corporate blog In October he detailed how the company would spend $10 billion over the next several years building infrastructure to help developers mainstream the new digital world.

As far as it may seem, it is not such a big leap. Many metaverses still exist.

Fortnite, the virtual world platform for online gaming, has become a $5 billion annual business for parent company, Epic Games. Inside Fortnite, the company hosts virtual concerts with Travis Scott and other large events that members can experience from the comfort of their living rooms. Meanwhile, Epic gets to sell tickets and virtual goods and services like avatar outfits and gameplay enhancements.

Roblox (RBLX) Another is the Metaverse gatekeeper. The company reported in November that revenue rose 28% from a year earlier to $638 million. The software platform primarily caters to children and is sometimes referred to as Digital Lego. About 164 million monthly active users can create an online world, play games, shop and communicate with app developers.

Meta Platforms is taking its metaverse to the next level. The Menlo Park, Calif.-based company will spend a lot of time reaching out to developers to build all aspects of a new digital reality. Metaverse members will be able to set up virtual shops where they will sell both real world and virtual goods. Corporations will make conference calls. And the next level will be gaming.

That’s where Oculus comes in. Meta Platforms bought Oculus in 2014 to widespread suspicion. VR certainly wasn’t ready for primetime at the time. Using the headset for a long time causes nausea. Unfortunately, those poor first impressions remain.

App Store data shows there is a market for VR, and it is much larger than current belief.

The Oculus app tops perennial store favorites like Tik Tok, YouTube, Snapchat, Instagram, and Amazon Alexa. These are all established digital communication platforms. It’s also the first time Oculus has been in the top 10 during the holidays, a . According to Reportt at quartz,

Critics have argued that meta platforms cannot be successful because the company lacks the public trust of firms such as Apple, Alphabet (GOOGL), Amazon.com (AMZN) or Microsoft (MSFT), This is simply not true. Meta has already garnered social victories with its Facebook platform. The metaverse is an evolution of the social.

Currently Facebook is driven by digital ad spend. Members visit its portal where they are captive for advertisements. Facebook sets the terms and costs as it owns the platform. Its analytical tools allow ad buyers to narrow down demographics and perform A/B testing that is impossible on other platforms. Facebook commands an 80.5% gross margin for these services.

according to a report good At Statista, global digital advertising was estimated at $378 billion in 2020. Researchers expect that figure to reach $646 billion by 2024 as shoppers move away from less measurable mediums such as the outdoors, print, television and radio.

Oculus and Metaverse will provide Meta a new platform to expand that business. It will certainly mix e-commerce, application sales and other business verticals as well.

Investors are sleeping on this opportunity as pundits agree that no one trusts Zuckerberg or Meta, and the in-your-face technology seems untenable. The popularity of Facebook, Instagram and now Oculus should dispel this myth.

At a price of $346.22, the stock trades at 24.3x forward earnings and 8.5x sell. Given the rise in digital ad spend, Meta’s gross margin, and Oculus’s newfound popularity, these metrics seem cheap.

Investors should consider buying Facebook in case of any major weakness.

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