Meta Platforms (NASDAQ: META) has continued to feel the pressure lately. The recent reveal of the new Meta Quest Pro didn’t do much for the share price. With sights set on the enterprise (the future of the workplace) and gaming, many investors may think the firm is getting a bit ahead of itself. Regardless, Meta’s ambitions, I believe, could translate into improved fundamentals a lot sooner than many metaverse skeptics think. The most remarkable part of the Meta Connect 2022 presentation was not the Quest Pro headset itself. Instead, the partnership with Microsoft (NASDAQ: MSFT) seemed incredibly intriguing. Meta Quest devices will have access to select MSFT apps.
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I am bullish on META stock.
Meta Platforms: Aiming for Enterprise Growth with the Quest Pro
Understandably, not everybody can afford to drop $1,500 on a pro-level mixed-reality headset for entertainment purposes – not until the metaverse and VR/AR headsets become more widely adopted, like today’s smartphones. That’s why I think Meta’s enterprise angle is intriguing in its own right. While a looming economic recession may take a hit on corporate budgets, I do think various forward-thinking firms are open to buying headsets for their remote or hybrid employees if productivity is enhanced by such investments.
Meta’s partnership with Microsoft could be vital to making the Quest Pro (and the metaverse) a profitable endeavor over the medium term. Microsoft is already the king of the workplace, with Teams and Office. With virtual-reality-enabled versions (think Mesh for Microsoft Teams) of such software available to the public, I find it hard to dismiss Meta’s metaverse any longer.
Sure, it may seem far-fetched to many, but partnerships could accelerate the metaverse uptake by some time – perhaps years.
Meta Sets Sights on Gaming with Xbox Partnership
It’s arguable that video gaming will be the bigger draw to the metaverse over time. Thus far, VR or AR headsets have all been geared around gaming, whether we’re talking about Oculus headsets, PlayStation, or Valve’s Index. While Meta has a presence in the gaming world, it’s playing from behind. Over time, Meta will be sure to close the gap as it doubles down on gaming. In the meantime, the Microsoft partnership to bring Xbox Cloud Gaming could be the missing piece of Meta’s metaverse puzzle.
I’ve praised Microsoft for its Xbox Game Pass and Cloud Gaming services numerous times in the past. It has an enviable lead in video gaming, one that’s unlikely to be given up anytime over the next decade. What makes the Meta-Microsoft partnership worthwhile for Microsoft is that it’s leaving the costly hardware aspect to Meta.
Now, Microsoft has its HoloLens product, but the lofty price tag and questionable reputation in consumer hardware make the product less appealing to the masses. Indeed, Microsoft may opt to create a different type of headset in the future. In the meantime, the partnership seems to be low risk. If anything, allowing Xbox Cloud Gaming in a virtual-reality environment could help Microsoft further improve upon its gaming innovations while onboarding a slew of new subscribers.
Xbox Cloud Gaming seems to be above and beyond the competition. With just a stable (and strong) network connection, users can stream their favorite video games without so much as needing to download them.
I think the inclusion of Cloud Gaming is a (pardon the pun, please) game-changer for the metaverse. For now, virtual screens for games will be the norm. In due time, though, one has to think that a Microsoft-Meta partnership could bring forth triple-A VR-exclusive experiences.
Indeed, it’s an exciting time as the two giants look to take on the metaverse together.
Is META Stock a Buy, According to Analysts?
Turning to Wall Street, META stock comes in as a Moderate Buy. Out of 34 analyst ratings, there are 26 Buys, six Holds, and two Sell recommendations.
The average Meta Platforms price target is $206.36, implying upside potential of 54.9%. Analyst price targets range from a low of $140.00 per share to a high of $275.00 per share.
Conclusion: It’s Hard to Dismiss Meta’s Potential
After Connect 2022, I think it’s hard to dismiss Meta’s metaverse growth prospects any longer. Sure, we may still be many years away from a “mainstream” metaverse that has a massive roster of native experiences. Regardless, partnerships could be key to mitigating the risks of delving into the digital worlds of the future.
First and foremost, Meta is still very much a social media company. However, a profitable metaverse business may be closer to reality (again, forgive the pun) than we’ve all been led to believe.
