What happened
Shares of current social media giant and future metaverse play Meta Platforms (META +8.70%) suffered a glitch Friday, falling 4.6% through 11:50 a.m. ET. And granted, the whole stock market is in the red today -- spooked by a government report that inflation just hit a 41-year high, the Nasdaq itself is down a not-insignificant 3.6%.
But Meta Platforms has troubles all its own.
Specifically, tech publication The Information is reporting this morning that Meta has canceled its planned smartwatch, is limiting marketing of "Portal" display devices to businesses, and is postponing a planned release of augmented reality "Project Navare" glasses past 2024.
NASDAQ: META
Key Data Points
So what
Meta has been famously pivoting its business away from the traditional social media site that it pioneered, and toward a new virtual reality future in the metaverse -- to the extent that it even changed its name. (And changed its stock ticker symbol, too, on Thursday, June 9.)
This effort won't be cheap. It's part of the reason Meta is spending $20 billion in capital investments this year, and plans to spend nearly $25 billion next year. But at the same time as Meta is spending all this money, we now learn that several products tied closely to the metaverse -- the smartwatch, the Portal screens for teleconferencing, and now the Project Navare smart glasses, are all getting canceled or delayed.
That doesn't seem to make much sense, and this may be making investors nervous today.
Now what
And yet, consider: Canceling or pushing out hardware projects may simply be a way for Meta to husband cash to pay for advancements even more closely tied to building a metaverse (the software needed to support it, for example). And of course, the latest delay reported -- the smartglasses -- were still at least a couple years away from being ready to market in any case.
Granted, today's news may sound disconcerting to some investors, and it may turn out to mean that Meta has fallen behind rival companies also developing competing virtual reality glasses (Alphabet for example, and Apple, too). For the time being, however, I'm not convinced that a "delay" of a project still years away from completion is a great reason to panic about Meta stock today -- or to sell it.
