Facebook made headlines in October 2021 after changing its name to Meta Platforms Inc (NASDAQ: FB). The new name better reflects its work and commitment towards building a metaverse the company said. The Metaverse is a shared virtual environment that aims to help people connect, find communities and grow businesses.
In a press conference, CEO Mark Zuckerberg displayed demos of users interacting through their avatars and traveling to virtual places of their choice. Facebook is confident that the Metaverse will reach over 1 Billion people over the next decade.
In the first quarter of 2022, Meta Platforms will change their stock listing from (NASDAQ:FB) to its new Metaverse branding under the ticker (NASDAQ:MVRS). With plenty to breakdown regarding the future of MVRS stock, this article will explore the Meta stock forecast over the coming years.
Is the Metaverse the future for Facebook?
The Metaverse announcement included demos presented to the public to show the potential future of metaverse, a virtual environment where users can step in and meet new people.
It would also enable them to work and play inside that virtual world using VR headsets and augmented reality glasses. The company’s hardware unit, Facebook Reality Labs, is pursuing its AR and VR efforts. Moreover, it also established a product team earlier this year to solely focus on its metaverse efforts.
The social network giant said the new name better represents its different apps and technologies. The rebranding comes at a time when the company is facing heavy criticism from U.S. regulators over its algorithmic and market power.
How did the market react to the Meta stock rebrand
Meta Platforms stock rose for two straight days following the rebrand news, and is trading 7% higher since October 28. Change can either be good or bad. However with the growing expansion of the Facebook enterprise it was likely at some point the company would seperate its branding from the Facebook platform.
This is because the companies vastly growing subsidiaries including the likes of WhatsApp, Oculus VR and Instagram are better represented under a group name.
“Right now our brand is so tightly linked to one product that it can’t possibly represent everything we’re doing today, let alone in the future. Over time, I hope we are seen as a metaverse company, and I want to anchor our work and our identity on what we’re building towards.”Mark Zuckerberg, CEO and Founder of Meta Platforms
However, the companies ambitions to expand its services into a metaverse will be an expensive task. In fact, Meta Platformks expects to spend $10 Billion on developing the Metaverse in 2021 alone. In 2022, the company forecasts expenses to increase by $20 billion due to investments in both the Metaverse and the companies existing businesses.
Piper Sandler analyst Thomas Champion sees the Facebook’s name change to Meta as a bold yet risky move. The analyst noted the Facebook rebranding illustrates the depth of which the company is committed to developing a VR reality that interconnects its products. Champion remains Neutral on Meta stock after the announcement, reaffirming the analysts $385 valuation.
Meta Stock Forecast for 2022
In 2022, the average stock price target for Meta stock amongst Wallstreet analysts is $397.80. In December, UBS analyst Lloyd Walmsley initiated coverage on Meta Stock. The analyst currently has a Buy rating on Meta Stock with a price target of $425 for 2022. The analyst noted that Meta is positioned to benefit from ad budgets returning to normal levels as well as future upside in Reels, Watch and eCommerce functionality.
As for revenues in 2022, analysts expect Meta to generate $140.04 billion. The forecast suggests Meta’s revenues will grow by 19% year-over-year.
How far away is the Metaverse?
Although the companies metaverse ambitions are already underway, the company sees 5-10 years before it will become a reality. The company will report its Metaverse investments and developments under the Facebook Reality Labs (FRL) segment. The Facebook Reality Lab includes augmented and virtual reality related consumer hardware, software and content.
So for investors, the Metaverse will be a long term play as Facebook likely won’t see any significant revenue until the right infrastructures are in place.
It is an exciting prospect that can yield a vast range of revenue streams. However the road to a Metaverse will be expensive task, likely funded with investor equity.
Final thoughts – Meta Stock Forecast
Overall, visionaries such as Mark Zuckerberg are driving society towards a hyper-connected future. A future with instant connectivity and virtual experiences, considered science fiction 10 years ago.
The Metaverse will be an expensive project, one of which will require constant investment in infrasture and acquisitions of talent. Therefore, investors will see the Metaverse as a long term play. A play that will likely hinder the capital expenditures and overall profitability of Facebook over the next 5-10 years.
In saying this, Facebook expect to generate between $31.5 billion to $34 billion in revenue in Q4 alone. The companies overall health is unlikely to be hindered too greatly, especially with their growing subsidiary list that continues to drive revenues higher. The Metaverse is a space to watch, and we will see if the Meta rebrand will bring about new investors in the near future.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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