What happened
Shares of Meta Platforms (META +1.33%) were sliding today, in line with a broad sell-off in tech stocks and after the company launched a new VR subscription service that seemed to fail to excite investors.
As a result, the stock closed the session down 3.6%.
NASDAQ: META
Key Data Points
So what
The big news out of Meta was the launch of its new VR subscription service, Meta Quest+, which costs $7.99/month or $59.99 annually. In exchange, subscribers will get two handpicked virtual reality games to play each month. Meta's offering a promotion for the service at just $1/month through July 31, and the company called it "the most affordable way to grow your library with killer content."
The move represents Meta's latest push to boost demand for its Quest VR devices. Earlier this month, Meta lowered the price tag on its Quest 2 devices to $300 and said the upcoming Quest 3 would start at $500 this fall.
Separately, Meta scored a pair of bullish notes from Wall Street analysts.
UBS raised its price target from $300 to $335 and maintained a buy rating on the stock. Analyst Lloyd Walmsley said he expected the company to integrate generative AI into its apps and be viewed as an AI winner. He also called Meta his top pick.
Roth MKM analyst Rohit Kulkarni also gave Meta a nod, calling the stock his top internet megacap pick after Amazon, following a price target hike on Meta from $255 to $315 on Friday.
Now what
Meta stock has soared this year as investors see the company as a winner from AI and have cheered its efforts to cut costs and boost profitability.
However, the company's metaverse strategy is still in doubt, and the company is now facing a stiff challenge in the headset market from Apple, which will soon release the Vision Pro. Though the Apple device comes at a much higher price point than the Meta Quest, if Apple ends up dominating the headset market, it will mark a significant defeat for Meta, as CEO Mark Zuckerberg has been talking about the need for the company to control the next computing platform.
The new subscription could add a new revenue stream for Meta, but it's also evidence that the headset is mostly a device for gamers, adding to the perception that its utility is limited.
