The notion of Meta Platforms (META) and glasses has gone together surprisingly well over the years, especially after Meta acquired Oculus. Now, Meta is looking into a stake in EssilorLuxottica (ESLOY) that will give it a piece of the company that makes Ray-Bans. Meta investors, meanwhile, were reasonably happy about this, sending shares up nearly 1.5% in Thursday afternoon’s trading.
Meta looked to take on about 5% of Essilor, which is currently working with Meta in building the Ray-Ban smart glasses line. Essilor is also the world’s largest eyewear company by volume, which suggests that Meta is really looking to double down on the smart eyewear concept. Such a move will set Meta back substantially, as the price of that stake could be worth around 4.3 billion Euros.
Reports suggest that Meta is looking to get a better handle on the development and production of smart glasses, as more companies—including one of its primary competitors, Apple (AAPL)—are increasingly looking at this market and seeing the opportunity therein.
Trouble in Meta Reality
And yet, there’s a problem here. Even as Meta looks to develop smart glasses hardware, it’s already seen visibly paring back on its development in virtual and augmented reality. Meta has been pushing hard into artificial intelligence, and that’s taking cash out of Reality Labs’ hands.’
Reports note that Reality Labs has already been asked to pare back spending by 20% over the next three years, and most of those cuts will happen this year. It’s getting to the point where you have to wonder what people will watch on those new smart Ray-Bans when Meta has gutted the department responsible for a lot of that development.
Is Meta Platforms a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on META stock based on 38 Buys, three Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 48.59% rally in its share price over the past year, the average META price target of $536.16 per share implies 14.25% upside potential.
