Facebook, now known as Meta Platforms (NASDAQ:FB) just opened up its Horizon Worlds metaverse platform to the adult world in the U.S. and Canada. Can someone please tell me that the company’s metaverse aspirations won’t just be limited to another game? That’s not going to go down well with FB stock investors.
Is this really what Zuckerberg wants us to believe is the future of social interaction in the metaverse? Investors won’t react too kindly to this version of the company’s future. As I pointed out in my recent article on Facebook’s recent quarterly results, its bread and butter is its digital advertising. That is not going to go away anytime soon, metaverse or not.
Or will it? For one, I don’t know any adult who really takes Facebook seriously as a place of business. Do you? Most professionals will show you their LinkedIn profile (owned by Microsoft (NASDAQ:MSFT)) before they give you their Facebook account.
What’s Going on With Horizon Worlds?
So does Facebook really expect adults to move their social interactions into a non-reality-based platform like Horizon Worlds?
No, they don’t. That is why they put a sign saying Horizon is open to “everyone 18+” in the US and Canada. Up is down here. Facebook knows full well that younger people will want to be on Horizon Worlds, especially if the company limits it to “everyone 18+.”
Facebook has a diverse audience including adults and young people. The audience for Horizon Worlds — a pseudo world of games, including laser-tag, flying over cities (“Wand and Broom”), and riverboat traveling — will likely include many young people as well. I expect that Facebook counts on young adults posing as 18+ to join Horizon in droves. After all, that is who they need to reach with advertising in this world.
But that brings up the nasty subject of how Zuckerberg expects to monetize this metaverse. The truth is that it is not likely to start out with digital ads. But in the end, he will have to eventually insert them in the Horizon Worlds metaverse, especially if its Facebook platform starts to show lower ad revenue.
FB Stock Is All About Ad Revenue
Facebook is losing some control over its sources of ad revenue. Most people use their phones to get into the app. Last quarter Apple (NASDAQ:AAPL) started allowing people to opt-out of app tracking on their phones, hurting Facebook’s ability to have advertisers reach them.
As a result, Meta Platforms now wants to control its followers’ eyeballs. By allowing them in the metaverse called Horizon Worlds, digital ads could be inserted into the virtual reality world.
For example, there could be signs, billboards, TV ads, pop-ups and all kinds of other ways in this world to reach these eyeballs. In a way, it could be like the digital billboard ads that were populated throughout the futuristic city in the 1982 movie Blade Runner with Harrison Ford.
What to Do With FB Stock
The truth is that Facebook is a cash cow with its existing digital ad platform. That is not going to go away anytime soon, as I discussed in my last article.
As a result, now is a great time to buy FB stock, as it is still well below its peak of $384 earlier this year. Moreover, as I pointed out in my last article, most analysts have much higher target prices for FB stock.
My own estimate is that the stock is worth at least $515 per share, as I explained in my last article. That assumes that Facebook will keep relying on its cash cow digital ads on its existing social network platform, Horizon Worlds or not.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.