Meta Platforms’ (NASDAQ:META) work in virtual reality has been nothing short of ambitious. However, we’re finding out that, despite the ambition, it’s not exactly going well. New word from TF Securities analyst Ming-Chi Kuo suggests that the news is only worsening for Meta, and the market is responding accordingly, sending shares down fractionally in Thursday afternoon’s trading.
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Ming-Chi Kuo’s report notes that the mixed reality platform’s demand is on the decline, and “significantly” at that. That in turn means it’s likely that the Quest 3 platform will generate higher losses than previously anticipated, and that’s a sock in the bottom line that Meta Platforms doesn’t need right now. Or ever, really. And the forecast looks even grimmer than you’d think. While previously, demand for the Quest 3 was projected at over seven million units, the forecast dropped to between two and 2.5 million units. Further, forecasts for 2024 won’t get better, as those have dropped to one million units.
With that in mind, it’s easy to understand why Meta announced layoffs hitting the Metaverse unit starting yesterday. The unit most impacted, known as the Facebook Agile Silicon Team (FAST), has around 600 employees. By the end of this week, they will likely have significantly fewer, though it’s unclear just how fewer will actually be on hand. Meta has also been having trouble building chips to match those already on the market, and even turned to Qualcomm (NASDAQ:QCOM) to serve as a supplier.
What is the Target Price for Meta?
Despite this, analysts are still very much on Meta’s side. Meta Platforms stock is considered a Strong Buy, supported by 42 Buy ratings and two Holds. Further, with an average price target of $375.90, Meta Platforms shares offer investors 24.26% upside potential.