Facebook Is Serious About AR, VR, Analyst Says After Connect Conference

Jayson Derrick

Thu, Sep 17, 2020, 1:44 PM2 min read

Social media giant Facebook, Inc. (NASDAQ: FB) hosted its Facebook Connect Conference Wednesday to outline the next steps in the company's long-term push toward augmented and virtual reality technology, according to BofA Securities.

The Facebook Analyst: Justin Post maintains a Buy rating on Facebook with an unchanged $335 price target.

The Facebook Takeaways: Facebook showed off the new Oculus Quest 2 headset, which is lighter than its predecessor and has an improved display and faster processor, Post said in the note.

The headset carries a $299 price tag — $100 cheaper than the original Quest.

Oculus hardware is making "big strides," but better software applications are a prerequisite for mass market adoption, the analyst said. Facebook's tone suggests that it's a matter of when, not if, he said.

Facebook detailed a new multiyear partnership with EssilorLuxottica, the parent company of Oakley and Ray-Ban, to build a pair of Ray-Ban branded smart glasses for release in 2021, Post said.

The complete features of the smart glasses are not yet known, but the Ray-Bans will mirror the display of a connected smartphone.

Other smart glasses initiatives from Facebook include researching a device that gathers data for machine perception and AI research, the analyst said, adding that the objective is to figure out how AR can work in the real world.

Facebook is likely several years away from mass smart glass adoption, as getting it right is "very hard," he said.

The event demonstrated Facebook's seriousness about AR and VR development for the longer-term, Post said.

Any near-term bottom line impact will be "muted" considering the low-margin nature of the hardware, the analyst said.

A reasonable timeline for tangible benefits from investments in AR and VR is five to 10 years, according to BofA.

FB Price Action: Shares of Facebook were trading lower by 4.07% to $252.80 at last check Thursday.

Related Links:

Facebook Partners With Eyewear Giant To Make 'Smart Glasses'

Facebook's Oculus Quest 2 VR Headset Comes With Better Specs And Lower Cost Than Predecessor

Latest Ratings for FB

Sep 2020	KeyBanc	Initiates Coverage On	Overweight
Aug 2020	UBS	Maintains	Buy
Aug 2020	Jefferies	Maintains	Buy

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