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Facebook parent company Meta Platforms (NASDAQ:META) hosted its annual Meta Connect event on Tuesday, featuring a keynote presentation by CEO Mark Zuckerberg, outlining Meta’s progress on Reality Labs products and software, and its vision for the future of the metaverse
Meta shares fell almost 4% in Tuesday’s session, while it is down a further 0.75% at the time of writing on Wednesday.
“After outlining its metaverse vision in 2021, Meta showed more of its product slate at Meta Connect 2022, and that partnerships play a key role in platform development (e.g., Microsoft (NASDAQ:MSFT), Accenture (NYSE:ACN), Epic, Google’s (NASDAQ:GOOGL) YouTube, and Ray-Ban were all mentioned as partners),” commented KeyBanc Capital Markets analysts.
The analysts, who have an Overweight rating on Meta, said they see near-term challenges, such as the metaverse likely remaining a decade-long investment and the fact there “remains a chicken/egg dynamic between user growth and compelling content.”
“While the Quest Pro has an impressive feature set, we struggle to see adoption at a $1,499 price point and with limited battery life (est. 1-2 hours per charge),” added the analysts. “In short, we continue to view metaverse discussions as a sidebar to the core debates. Specifically, we believe Meta’s fundamental performance continues to center on: 1) underlying engagement (e.g., is Reels additive to time spent?); 2) ad cycle sensitivity; 3) whether AdTech investments are beginning to bear fruit around measurement improvements; and 4) how management is sizing opex and capex investments.”
Elsewhere, Needham & Company analysts stated the firm admires the company’s vision but maintains an Underperform rating on the stock.
“We admire Mark Zuckerberg’s commitment to a vision in the face of overwhelming odds. META is willing to make big bets that may change the world for 2 billion consumers, or create an epic fail,” said the analysts.
