Meta Introduces New VR Headset; Analyst Backs Apple

Meta Platforms’ (NASDAQ:META) CEO, Mark Zuckerberg, unveiled a new VR (Virtual Reality) headset, Quest 3. This comes ahead of Apple’s (NASDAQ:AAPL) WWDC event (set to begin on June 5), wherein the company is expected to launch a mixed-reality headset. While Meta is racing ahead in the VR space, Goldman Sachs analyst Mike Ng is backing AAPL to succeed in the VR industry. 

In a note dated May 23, the analyst highlighted that the AR (Augmented Reality) and VR spaces have been “disappointing” as of yet. However, he expects AAPL’s AR/VR headgear could succeed thanks to its large user base, direct sales model (both online and offline), and existing apps that can be leveraged for AR/VR. 

It’s worth highlighting that Meta’s Reality Labs, which develops its AR/VR hardware and software, posted a decline of 51% in Q1 sales, reflecting a drop in Quest 2 revenues. Further, the segment reported an operating loss of about $4 billion. 

Meta’s Reality Labs is bleeding money while sales remain subdued for its VR headset. Further, the company expects the segment’s losses to increase in 2023 compared to the prior year. 

Adding to Meta’s problems, the competition will likely increase in the VR space with Apple’s new product. Meta is already facing tough competition in the industry from TikTok’s parent company, ByteDance. Nonetheless, the company is focusing on immersive experiences like VR and expanding its VR ecosystem through new apps. 

Its new Quest 3 VR headset is thinner and carries the next-gen Qualcomm (NASDAQ:QCOM) chipset. Further, the headgear will have a starting price of $499. 

Is META Stock a Buy, Sell, or Hold?

META stock witnessed a steep recovery and has risen over 126% year-to-date. Investors cheer the company’s deep cost-cutting initiatives to support profitability

Wall Street analysts maintain a bullish view on Meta stock. It has received 39 Buy, four Hold, and two Sell recommendations for a Strong Buy consensus rating. However, due to the recent rally, analysts’ average price target of $284.19 implies a limited upside potential of 4.25%. 

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