Snap (NYSE:SNAP) is well off its $83.34 yearly high when shares plunged in Oct. 2021. Since then, SNAP stock has stabilized despite other social media stocks faring poorly. Meta Platforms (NASDAQ:FB) fell after posting its first-ever decline in users in 2021. Emarketer previously projected a 96 million user addition. Instead, Facebook lost users. Just as Facebook’s parent is diversifying its business away from social networks, Snap is, too. Both firms realize that the trend of seeking attention online or consuming unhealthy content will end. People will want deeper interactions than that. The first way a tech company will meet such needs is through the metaverse.
On March 24, Snap acquired a company that supports a metaverse controlled by thoughts. It acquired NextMind, a French firm founded by a team of neuroscientists and hardware engineers in 2017. The company is a neuro-technology startup that develops a brain-computer interface (BCI) band. At the 2020 Consumer Electronics Show (CES) in Las Vegas, it unveiled a its brain-sensing headband. Users could play a computer game by moving a cursor and controlling a lamp hands-free. This acquisition will enable Snap to realize its long-term plans of offering augmented reality to its users. Furthermore, it will complement Snap’s development of Snap Spectacles (augmented reality glasses). However, tech media outlets have not been impressed with Snap’s first AR attempt. The Verge described its early efforts as an ambitious, impractical start.
Snap investors, so far, have not been interested in the company’s hardware developments. Besides, hardware margins are typically lower than that offered by advertising and software. Since the social networking growth prospects are worsening, Snap must pivot. For example, Twitter (NYSE:TWTR) and Pinterest (NYSE:PINS) are poor performers on the stock market. The good news for SNAP stock is its ambitions in AR. Investors will realize its efforts will strengthen Snap’s user activity. Expect Snap shares to keep going up steadily, ahead of its earnings report. By then, investors will look for stronger user activity on the Snap platform.
On the date of publication, Chris Lau did not have (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.