Invest in the Virtual Reality Boom With These Stocks
From Facebook to HTC, a Look at for Leaders
Hotshots in the high-tech intelligentsia point to a number of trends that promise to change our lives in the next five years. These include the Internet of Things (IoT), which allows devices to talk to each other without human interaction. A simple example: Instead of driving to the bank, your car might be able to talk to your bank’s computers and move money around for you. And another one of those technologies not to be underestimated is virtual reality, also known by the initials VR.
Today, VR is often thought of as strictly in the gamer realm, largely because it is. The companies vying for dominance in the growing VR world have staked most of their turf around what game aficionados want. Yet the potential for VR's expansion into all aspects of digital life is immense. As reported in Vanity Fair, no less a digital kingpin than Facebook’s Mark Zuckerberg sees the future of VR thus: not just a portal for games, but also for movies and TV, lectures, and business meetings. He even sees headsets that will eventually scan our brains and then transmit our thoughts to our friends the way we share baby pictures on Facebook today.
(Facebook scanning your brain? Now there’s a scary thought.)
At this point, the future of VR may not be quite that primed for paradigm explosion just yet. But as an investment, the future is indeed now. Here are four companies worth looking at in the VR world that have already gained a promising head start in what soon promises to be an ultra-competitive field.
HTC: Can Vive Revive?
Trading on Taiwan’s stock exchange, HTC is struggling to assert its investment worthiness, as over the last year its stock has dropped close to 17 percent. There is good news, though: HTC has given its VR competitors a run for the money with its ambitious, energetic marketing of the Vive headset. Since its unveiling in March 2015 Vive has hit its stride; at this point, there’s little doubt it will stick among the dominant players in the market. Gamers can’t help but get geeked, for example, by the prospect of the Vive adding “Star Trek: Bridge Crew” as part of its bundle in June.
And it’s just been announced that Vive will go wireless thanks to a boost from Intel’s new WiGig technology. As CNET reports, that makes the Vive the only virtual reality setup to provide a truly walkable experience that tracks users and keeps everything in proper scale. So when will Vive’s laudable performance and advancements translate to big gains for HTC investors? That’s hard to say, since HTC does much more than virtual reality, what with its smartphone division. Results for the first quarter of 2017 were mixed, with HTC showing losses, but those losses slowing thanks in large part to streamlined operating costs.
Samsung: Fab Gear
Like HTC, Samsung is a Korean company diving into VR that stakes much of its success on the smartphone sector. To that end, Samsung is a much more powerful player, given its ability to take Apple (AAPL) and its iPhone head on. Yet Samsung still has some damage control to do given its horrible 2016 disaster with the Galaxy Note 7. It was a flameout in every sense of the word after a series of battery fires turned the $40 smartphone into a $17 billion headache. PR gaffes didn’t help as Samsung stumbled in pulling the Note 7 from the market.
Yet Samsung has shown a willingness to learn with a new whitepaper on the debacle, and there’s nothing like new tech glitter to make cautious consumers forget the past. In terms of VR, Samsung has the Gear controller, which will leverage the Oculus app and Google’s Chromecast streaming adapter to allow bystanders to watch on video what’s happening in the headset. And Samsung’s just-introduced prototype display has triple the pixel resolution of Rift or Vive.
Alphabet (GOOG, GOOGL): Sweet Spell of VR Success?
Let’s face it, VR fans: Google Glass wasn’t exactly the kind of hit the search engine-plus colossus is used to cranking out on a constant basis. What’s more, its famous (or infamous) “moonshots” have of late come crashing to Earth. These run the gamut from solar-powered drones to high-flying balloons intended to bring WiFi coverage to rural areas. But if investors can count on anything, it’s that Alphabet learns quickly from its mistakes—and its forays into VR could likely prove worthy of its Wall Street reputation.
Aside from its Daydream VR platform, Alphabet is making waves with Google Cardboard. Ultra-cheap at roughly $10, it’s designed to turn a smartphone into an immersive gaming and VR-experience gateway that works in tandem with Cardboard-friendly apps. Meanwhile, there is nothing virtual about Alphabet as an investment. Its GOOG Class C stock is up 31 percent over the last year, now trading at about $966 per share. What’s more, Alphabet remains in a constant seesaw battle with Apple for the mantle of the world’s most valuable company.
As of present, its market cap weighs in at a staggering $667.5 billion (Apple’s is $798.1 billion). To put that in perspective, Alphabet’s worth easily surpasses the GDP of Sierra Leone.
Facebook (FB): A Growing Rift
Things haven’t been blue sky for Facebook’s prized VR acquisition, Oculus. For all the hype the Oculus Rift received prior to its March 2016 release, it still faces stiff competition from other players that have garnered far less media attention. This in large part led to a $200 price drop in March of this year (to $598) for the Rift headset and its accompanying Touch controller. Still, Oculus is not to be taken lightly—and like companies such as Alphabet and Amazon (AMZN), Facebook seems to have unlimited resources to throw behind a project until it sticks.
After all, when Mark Zuckerberg makes a $2 billion bet on a company, he doesn’t like to lose. He also sees a bit of himself in Palmer Luckey, who was a fresh-faced 22-year-old techie when he pitched Oculus via Kickstarter. Finally, consider that Facebook paid $1 billion for the photo-sharing app service Instagram in 2012, and since then it’s gone gangbusters, with more than 700 million users as of April. That’s almost double the 400 million it hit in September 2015. Could Facebook fold Instagram into VR someday?
Let's just hope it doesn't scan the typical teenage brain.