Meta Platforms is a Buy, says Roth

Roth Capital Partners analyst Rohit Kulkarni maintained a “Buy” rating on Meta Platforms (Meta Platforms Stock Quote, Charts, News, Analysts, Financials NASDAQ:META) in a Monday company note where he reviewed the metaverse terrain. Kulkarni said of the metaverse-supporting businesses, Meta Platforms has some catching up to do in comparison with other platforms like Roblox and Minecraft.

Roth Capital recently hosted a conference call with the co-founder and Head of Interactive Media at a leading metaverse creative agency based in Los Angeles, who spoke of the increasing interest in recent years in the metaverse. 

Roblox is the current leader in the space, according to the industry expert, who said that despite an initial wave of interest waning in the technology, overall business interest among brands is growing. His agency works with some of the largest enterprises globally, including Facebook, Nike, McDonald’s and Uber, with business growing over the past two years. The expert relayed that initial headline hype is fading but enterprises are now dedicating fully-built teams to the vertical.

“It’s still early in terms of how advertisers are viewing and measuring creative effectiveness, but the brands he works with are realizing the power that comes with unique ways to connect with users on these platforms,” Kulkarni wrote.

The expert said that Roblox’s leadership stems from its reach and creative flexibility and its ability to support brands just getting started in the metaverse space. 

At the same time, the speaker said that Meta Platforms’ plan to link metaverse applications to hardware has so far garnered little agency support, where Meta’s Horizon Worlds platform is only growing modestly and is low on the list in terms of interest from brands.

“Meta doesn’t provide the tools for creators like Roblox, so brands need to work with 3rd party agencies to generate content for Meta VR properties,” Kulkarni wrote.

In terms of Apple’s interests in the metaverse space, the speaker predicted that Apple will eventually release a competitor to Meta’s Horizon Worlds and that Apple is currently partnering with metaverse platform Rec Room, which is to be pre-installed on all new Apple devices and supports experiences across web, mobile, VR/AR and game engines.

On META, Kulkarni maintained a 12-month target price of $255.00 per share, which at press time represented a projected return of negative four per cent. On the financials side, the analyst is projected META will generate 2023 revenue of $128.5 billion and EPS of $12.19 per share.