Meta Platforms, Inc. (NASDAQ:META) stock has been a high-flier this year as the social media platform’s “Year of Efficiency” mantra and improving economic fundamentals fueled a rally. As the company gets ready to host its “Meta Connect” conference on Sept. 27-28, an analyst at KeyBanc Capital Markets shed light on what could excite investors further.
KeyBanc’s Justin Patterson maintained an Overweight rating and $356 price target on Meta shares.
The Meta Connect conference will likely highlight the company’s progress with artificial intelligence, virtual reality, augmented reality, and mixed reality products, said Patterson in the note. Day 1 will begin with a keynote by CEO Mark Zuckerberg, at 1 p.m. EDT, and the day will focus on the Quest 3 VR headset, he said.
The company has previously disclosed information on Quest 3 such as 128GB capacity, with an additional storage option, a $499.99 starting price, and next-gen Qualcomm, Inc. (NASDAQ:QCOM) Snapdragon chipset, the analyst said.
Patterson also noted that the Quest 3 headset will ship with MR technology and be about 40% thinner than the Quest 2. “Net, we expect Meta will emphasize how the Quest ecosystem is advancing and how affordability is an advantage vs. competing products,” he said.
Artificial intelligence capabilities will likely be front and center, Patterson said, adding that Meta has had a steady series of AI announcements all year, from Llama 2, Code Llama, SeamlessM4T, and AudioCraft.
“While it is hard to predict which area of AI Meta will focus on at Connect, we see ample opportunities to improve user and advertiser experiences across the core Family of Apps and in Facebook Reality Labs (FRL),” he added.
KeyBanc expects FRL to clock an operating loss of $15 billion in 2023, wider than the previous year’s loss of $13.7 billion. This would mean a cumulative operating loss of $50 billion since 2019 versus the $7 billion revenue it has fetched, it said.
“Given the size of this investment and commentary for FRL losses to increase meaningfully y/y in 2024, we believe investors are keenly focused on tangible progress in products at Connect,” the firm added.
“As we expect opex and capex will likely be above consensus for 2024, we believe tangible progress with
AI and Quest products are increasingly key toward bolstering investor sentiment.”
Meta closed Monday’s session up 0.59% at $300.83, according to Zenger News Pro data. In premarket trading on Tuesday, the stock fell 0.68% to $298.79.
Produced in association with Benzinga
