Facebook recently changed its name to Meta Platforms (META 0.10%). And most investors are probably familiar with how this company generates most of its revenue through advertising. But investors may not realize how big Meta Platforms is in the video game industry.
In this video from Motley Fool Backstage Pass, recorded on Jan. 10, Fool contributor Jose Najarro explains to fellow contributor Jon Quast about all the ways Meta Platforms does business in the gaming industry. Specifically, this company is turning into one of the top destinations for live-streaming video game content.
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Jon Quast: Meta Platforms here, the company formerly known as Facebook. Of course this company has a top console right now in the Oculus. Jose, you're going to talk about this, and we all ranked it either four or five coming in collectively at No. 4 here.
Jose Najarro: Yeah. This is one I do own and I do enjoy. It's probably one of my favorites at the moment. Meta Platforms; Facebook, their main market is obviously the advertising. What is it doing here in "The Gaming Show"? But they are very heavily in the gaming market right now.
Like Jon mentioned, the Oculus did very well. Units sold in late 2021. Hopefully, we're going to get some true numbers during their most upcoming earnings to see how they did during the holidays. But for me, just being nosy on Twitter, I saw a lot of Oculus during holiday gifting. I think that's going to be good for the overall company.
But Meta Platforms, they also own a few gaming studios that create some of the games for the Oculus headset. They do have that. They also have Facebook gaming, which is a live-streaming, think YouTube, think Twitch. Twitch where you can deposit videos or livestream videos. Facebook has a platform like that, Facebook gaming. There, you can also, if you have some former streaming platforms or former video platform, you have people coming to your platform, watch the videos, and there you can hit them with advertisements. That's another way that Facebook is integrating both the advertisement with gaming.
They also have this small cloud gaming segment where you don't have to download any games and you can just use the Facebook app and play some of these games sometimes with other people. Again, not a big portion of the overall company's revenue, but just that push inside gaming. For example, I think recently in December, they released a Pac-Man version and you can play with four other people, or three other people, and just have this interactive. Again, it also helps them with the streaming. If you're streamer, or content creator, in Facebook's videos platform, it helps to play some of their games because you can interact with your viewers.
Overall, financially, this is a company with no long-term debt, trailing-12-months revenue, $112 billion, net income of $40.3 billion. Gross profits of, what is that? Over 30%, trailing-12-months of free cash flow of $35.8 million, huge cash and cash equivalents of over $58 billion. Financially, this is a company that's stable financially.
Future growth, I think some of my favorite things about this company is one, the metaverse. Maybe not the metaverse, how we're seeing it as Ready Player One. I think the metaverse, depending on who's talking, it can be a whole different thing. When I mention the metaverse, I definitely don't see this Player One mentality that we have, that a lot of us see. I feel we're still far off in the future. But a quick look on Twitter during the holidays, I saw people put on their Oculus headset, go into a virtual theater, and watch movies with other people. That's very easy to do right now. That's where the current metaverse is at. I don't think it has to be crazy, just that interactive-ness I believe will allow Facebook to increase it's advertising market.
Facebook is also hiring a lot of engineering force. These engineers are focused in creating new technology for their virtual reality brand. For example, they're making these gloves that are going to be for haptics sensors, so you can feel and get a senses every time you are grabbing or touching something. They're also focusing a lot in; we saw virtual reality with Oculus Rift. But they are also focusing on augmented reality. For example, they have video calls here, and you can add some form of digital hats or digital stuff around so you can make these video calls better.
Meta Platforms for me, it's a pretty cool move in the gaming, especially for the Facebook gaming streaming. I think it was one, either last quarter or the quarter before, was the only streaming that showed year-over-year growth compared to Twitch, compared to YouTube gaming. At the same time, this is a smaller portion, but it's still seeing growth. I think that's also pretty impressive for this company. That's what I had for Meta Platforms.
