Meta logo reflected in smart glasses highlights the company’s push into AR wearables and immersive tech growth. Key Points Shares of Meta Platforms got a boost in early December, helping stem the stock's precipitous fall. The company may make drastic cuts to its metaverse initiative, which has lost billions over the years. This potential shift would have many positive implications for Meta, especially as markets worry about soaring expenses. Interested in Meta Platforms, Inc.? Here are five stocks we ...

Core Insights - Meta Platforms is making significant budget cuts to its metaverse division, acknowledging that its previous focus on the metaverse was misguided and costly [1][5][11] - The company plans to reduce its metaverse budget by up to 30%, which is expected to save billions annually [6][11] - Meta's Reality Labs division has incurred substantial losses, with a reported loss of $13.2 billion in 2023 and $17.7 billion for the full year [3][11] Financial Performance - Meta's Reality Labs generated only $1.3 billion in revenue while incurring losses of $13.2 billion in 2023 [3] - The company's stock saw a positive reaction, increasing by several points following the announcement of budget cuts [6] - Since the layoffs in November 2022, which affected 11,000 employees, Meta's stock has increased over 500%, indicating a successful shift in strategy towards profitability [10] Strategic Shift - The cuts will affect products like Horizon Worlds and the Quest virtual reality unit, with layoffs expected as early as January [7] - This strategic pivot reflects a realization that technology must be useful to succeed, moving away from Zuckerberg's previous vision of the metaverse [7][12] - The company aims to redirect resources towards more practical applications, particularly in AI and other startup projects [12]

Core Insights - Meta is developing new mixed reality glasses, codenamed Phoenix, with a delayed release from the second half of 2026 to the first half of 2027 [1] - The new glasses are expected to have a format similar to the Apple Vision Pro, featuring a puck-like power source [1] Development and Strategy - Meta executives announced the delay after CEO Mark Zuckerberg emphasized the need for a sustainable business model and higher quality experiences [2] - The delay is seen as an opportunity to refine the product details, according to metaverse leaders Gabriel Aul and Ryan Cairns [2] Financial Adjustments - Meta plans to reduce its metaverse budget by up to 30%, indicating a strategic shift in resource allocation [2]

Meta is scaling back its metaverse spending and redirecting resources toward AI-powered glasses and wearable devices, marking one of the company’s most significant strategic pivots in years. Key Takeaways: Meta is cutting metaverse spending as it shifts focus to AI-powered wearables. VR platforms like Horizon Worlds have stalled, while smart glasses are gaining traction. The pivot aligns with a broader industry move toward lightweight, AI-integrated devices. The shift comes as investor skepticism ...

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Core Insights - Meta's shares dropped over 10%, resulting in a loss of approximately $25 billion from Mark Zuckerberg's net worth, marking the largest single-day loss for the company this year due to a significant tax charge impacting quarterly earnings [1][2] Financial Performance - Meta reported third-quarter earnings per share (EPS) of $1.05, which is 84% below the expected $6.72, despite revenues of $51.2 billion exceeding estimates of $49.5 billion [2] - The EPS decline of 83% year-over-year was attributed to a one-time tax charge of $15.9 billion related to tax legislation [2] - Without the tax charge, Meta's EPS would have been $7.25 [3] Future Outlook - The company raised its capital expenditure guidance from $66 billion-$72 billion to $70 billion-$72 billion, as it prepares for advancements in superintelligence [3] - Meta's Reality Labs unit, which focuses on VR and AI products, reported an operating loss of $4.4 billion with sales of $470 million, slightly better than Wall Street's expectations [3] Market Position - Following the stock decline, Zuckerberg's net worth is estimated at $232.6 billion, ranking him as the fifth-richest person globally, behind Larry Ellison and Elon Musk [4] Industry Context - Despite the recent stock drop, Meta's shares are still up 10% for the year, reflecting ongoing investments in AI and cloud infrastructure [8] - Meta has invested $14.3 billion in AI startup Scale AI and secured a $10 billion cloud deal with Google, indicating a strong commitment to enhancing its AI capabilities [8]

Core Insights - Meta's shares experienced a significant drop of over 12%, marking the largest single-day loss in years, primarily due to a nearly $16 billion tax charge that adversely affected quarterly earnings, bringing them well below Wall Street's expectations [1][2] Financial Performance - Meta reported third-quarter earnings per share (EPS) of $1.05, which is 84% lower than economists' projections of $6.72, despite revenue of $51.2 billion exceeding estimates of $49.5 billion [2] - The EPS saw an 83% decline compared to the previous year, which was $6.03, largely attributed to a one-time tax charge of $15.9 billion related to tax legislation [2] - Without the tax charge, Meta indicated that EPS would have been $7.25 [3] Future Outlook - The company raised its guidance for capital expenditures from a range of $66 billion to $72 billion to a new range of $70 billion to $72 billion, as CEO Mark Zuckerberg emphasized preparations for superintelligence [3] - Meta's Reality Labs unit, which focuses on VR and AI products, reported an operating loss of $4.4 billion with sales of $470 million, slightly better than Wall Street's expectations of a $5.1 billion loss on $316 million in revenue [3] Strategic Investments - Meta has invested significantly in AI, spending $14.3 billion on the AI startup Scale AI and hiring its CEO to lead its AI initiative, Superintelligence Labs [6][7] - The company has also secured cloud deals to enhance its AI infrastructure, including a notable six-year, $10 billion agreement with Google [7]

Core Insights - Meta Platforms, Inc. (NASDAQ:META) is being closely monitored by Wall Street as it continues to innovate in the XR space, particularly with its smart glasses, although significant revenue generation is not expected from this product [1][2] - The company's Family of Apps boasts an impressive 3.4 billion daily active users as of March 2025, which supports its advertising business [2] - Meta's recent fiscal first-quarter results exceeded expectations, driven by strong revenue growth and improved operating margins, leading to a rise in share prices during the quarter [2] Group 1 - Meta's smart glasses are seen as a low-volume, thought-provoking product that may not significantly impact revenue or profits [1][2] - The Reality Labs division focuses on next-generation augmented and virtual reality hardware, contributing to Meta's overall innovation strategy [2] - The company has introduced AI-powered ad-delivery tools that enhance pricing and campaign performance, alongside new revenue initiatives like ads in WhatsApp [2] Group 2 - Meta's strong financial position is highlighted by a cash-rich balance sheet and the introduction of a quarterly dividend [2] - Management has provided guidance for fiscal second-quarter revenue that exceeds consensus estimates while also reducing full-year expense guidance [2] - There is a belief among some analysts that other AI stocks may offer better investment returns compared to Meta, despite its potential [2]

Industry Overview - Virtual Reality (VR) has become one of the fastest-growing technologies, transforming various industries including gaming, healthcare, training, and cultural preservation [1] - The VR gaming segment reached a market value of approximately $17.96 billion in 2023, with a projected growth rate of 30.4% CAGR through 2032 [2] - North America holds over a third of the global VR market share, with major technology firms investing heavily in software and hardware to enhance accessibility and interactivity [2] Healthcare Applications - VR adoption is increasing in the healthcare sector, where it is used for training medical professionals through immersive simulations and improving patient treatment experiences [3] - The trend of using VR in healthcare is expected to accelerate as the benefits of training and treatment become more evident [3] Cultural and Sports Innovations - VR is being utilized in cultural contexts, such as allowing users to experience historical sites like Sednaya Prison in Syria through augmented reality [4] - In sports, Premier League club Burnley is using VR to provide fans with a "virtual seat" experience at Turf Moor, enhancing the match-day experience for global supporters [4] Investment Opportunities - A list of the 13 Best Virtual Reality Stocks to Buy has been compiled based on hedge fund interest, indicating strong market confidence in these companies [5][7] - The methodology for selecting these stocks involved using the Finviz stock screener and considering the number of hedge funds holding stakes in each stock as of Q2 2025 [7][8] Company Highlights - Snap Inc. (NYSE:SNAP) is highlighted as a top VR stock, with 35 hedge fund holders and positive feedback from marketers regarding its platform performance [9][10] - Best Buy Co., Inc. (NYSE:BBY) is also featured, with 44 hedge fund holders and a recent partnership with Uber Technologies to deliver electronics, including VR headsets, through the Uber Eats platform [12][13][14]

Investment Rating - The report assigns a Neutral investment rating for Goertek [1][17][18] Core Insights - Goertek is recognized as the global leading assembler for VR headsets, with expectations of a year-over-year revenue decline in 2025, followed by growth resuming in 2026 due to anticipated market share growth for new AirPods [11][17] - The revenue and earnings compound annual growth rates (CAGRs) are projected at 6% and 18% respectively for the period from 2024 to 2027, driven more by improved cost structure than top-line growth [11][17] - The earnings contribution from AR/AI glass is expected to be limited [11][17] Financial Estimates - Adjusted EPS for FY25 is revised down from Rmb0.95 to Rmb0.89, and for FY26 from Rmb1.11 to Rmb1.08 [2] - Quarterly forecasts for FY25 show Q1 at Rmb0.13, Q2 at Rmb0.16, Q3 at Rmb0.33, and Q4 at Rmb0.26, leading to an annual adjusted EPS of Rmb0.89 [3] - Revenue estimates for FY25 are adjusted to Rmb94,474 million, down from Rmb99,125 million, reflecting a 5% decrease [15] Valuation - The price target for June 2026 is set at Rmb22.50, based on a 19x one-year forward P/E, aligning with the average of peers [12][18] - The current market cap is approximately $9,959 million, with a share price of Rmb20.83 as of April 22, 2025 [10] Performance Metrics - Year-to-date performance shows a decline of 19.3%, with a 12-month performance increase of 39.8% [10] - The adjusted net income for FY25 is projected at Rmb3,090 million, with a net margin of 3.3% [21]