Facebook (FB) raised some eyebrows recently, with reports swirling that the company plans to change its name.
This is a significant event, as the company looks to invest a considerable amount in the development of the metaverse, with 10,000 new hires in the EU region devoted to working on the effort.
Undoubtedly, the metaverse is a strange concept to many, with few companies dedicated to the trend, which remains considerably abstract.
Indeed, Facebook is the social media powerhouse. I am bullish on Facebook. (See Analysts’ Top Stocks on TipRanks)
Still, if it’s to continue supporting its unbelievable high-margin growth amid a vast number of issues, ranging from Apple (AAPL) privacy pressures to potential regulations put forth by congress, the company needs to innovate further.
Facebook still commands enviable operating margins, but those margins will be put to the test. As they are, Facebook needs to take the next step to make a run for its fierce rivals in the FAANG basket.
Facebook to Get a Facelift
Of course, a facelift (pardon the pun) in the form of a company name change is precisely what Facebook needs, with the recent slew of negative headlines flowing in.
Indeed, this isn’t the first time CEO Mark Zuckerberg has been grilled, and it probably won’t be the last. In due time, the company will move on from this reputational crisis. A name shift alongside a shift of focus could shed some of the negative sentiment surrounding the name, which was undoubtedly exacerbated by a whistleblower.
Coming announcements relating to the metaverse or coming AR/VR products may act as compelling catalysts that could propel Facebook past the $1-trillion market cap.
While it is tough to get behind FB stock, given recent backlash, it still remains one of the cheapest in big tech. Although many may view the company’s practices as reprehensible, at the end of the day, earnings will dictate the stock’s trajectory. Currently, analysts are calling for upbeat revenue growth for the third quarter, which will be revealed on October 25.
With new colossal metaverse investments and a change of face, Facebook could find itself moving on from recent woes, sustaining its incredible margins, while giving a further boost to its already incredible growth.
Wall Street’s Take
According to TipRanks’ consensus rating, FB stock comes in as a Strong Buy. Out of 33 analyst ratings, there are 27 Buys, five Holds, and one Sell assigned in the past three months.
The average Facebook price target of $422.88 implies 24% upside potential. Analyst price targets range from a low of $300 per share, to a high of $500 per share.
Facebook: The Metaverse Company?
The metaverse is a thing of science-fiction dreams, and it will likely remain an abstract concept for many until they experience it for themselves.
Facebook, with its deep pockets and expertise, could be the company that brings the metaverse into the mainstream over the coming decade. Undoubtedly, it’s the next frontier as far as social media is concerned.
Although the metaverse, especially a VR or AR compatible one, could be a source of next-level growth for Facebook, it also comes with its fair share of risks.
The metaverse is the next step in accomplishing Facebook’s ultimate mission of giving “people the power to build community and bring the world closer together.”
Still, Facebook may be wandering outside of its circle of competence, as it moves on from social media to become more of a social gaming company. If such risks are not mitigated appropriately, they could prove to be costly.
In any case, Facebook has deep enough pockets to create a virtual universe that seems so out of reach for many firms. As the firm’s PR team goes on damage control, while the company makes an aggressive push into the metaverse, it will be impossible to ignore Facebook and its new face.
Disclosure: Joey Frenette had a position in Apple at the time of publication.
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