Facebook Missteps Open the Door for VR Competitors
Whistleblowers, despite the negative press they generate, aren’t the biggest problem Facebook is facing right now. Industries rise and fall. That includes social media. It’s unlikely that it will disappear completely, but we are seeing an evolution that could leave Zuckerberg’s empire in ruins. We’re not talking about walls and likes here. The future is virtual reality.
Since acquiring Oculus in 2014, Facebook has made a series of errors that have driven the once-promising VR application into the ground. Failed innovations, the October blackout, and a half-baked plan to deliver ads through Oculus headsets have left one million users wondering about what comes next. The door is wide open for Facebook’s competitors.
Sony is Already Dominating the VR Game Space
Facebook acquired Oculus to diversify their revenue stream. Buying other social media networks was attracting too much regulatory attention. They saw that during the Instagram acquisition. Buying into the VR space seemed like a good idea at the time, but kings in one country are simply interlopers when they cross the border.
Sony is already dominating VR, at least in the gaming space. The PSVR Morpheus headset posted sales of five million units by the end of 2019. Oculus Quest 2 gave it a run during 2020, with sales of one million units in Q4, but Facebook seems determined to alienate their client base in 2021. Sony doesn’t need to do much to maintain their advantage.
Investing in VR is tricky because both Sony and Facebook derive their revenue from multiple sources. Sony (SONY) is showing a moderate gain this year (12.36%), but a deeper analysis shows them in a steady uptrend since 2012. They’re considered a blue chip by many established investors. Facebook (FB) is down 13.20% this month and still falling.
Microsoft Could be the Big Winner if Facebook Fails
If you think Facebook is too big to fail, think again. History is littered with the broken husks of companies that were once giants in their industries. Privacy concerns and political pressure have sparked a movement to take Facebook down. Supporters of that movement gather momentum every time new revelations come out of Menlo Park.
Invest in Microsoft (MSFT) if you’re looking for the next big winner in the VR space. Share prices are up 40% this year and their HoloLens 2 product is an enterprise solution for existing AR/VR business platforms. Millennials grew up with gaming as a way of life. Expect that mindset to matriculate into the corporate world. Microsoft has the sales team to make it happen.
VR isn’t the only area where Microsoft can dominate. They also own LinkedIn and Microsoft Teams, two platforms that compete directly with Facebook’s core offerings. LinkedIn, in my opinion, is what a social media platform should be. Online marketers of serious business services agree. Ad revenue for the site is already over $3 billion for 2021.
Sell Your Facebook Stock and Don’t Buy the Dip
A lot of folks are thinking Facebook will recover and they’ll make a bundle if they buy the dip right now. Don’t do it. The stock was overvalued to begin with and we’re still looking at a significant market correction sometime in the next few months. Facebook had its day. Look for new technology that will replace it. That time has come.
In closing, I want to mention Google Glass, a product I came across while researching this article. Serious investors already know about Alphabet (GOOG), so this doesn’t really count as a stock tip. Google Glass is currently positioned as a business solution, but it’s cool enough to see mass adoption at some point. Check it out when you get a chance.
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