Facebook shares take a hit following Oculus purchase

Investors not excited about social networking site's $2 billion purchase of virtual reality company, but analyst still rates the stock a "BUY."

Facebook shares took a hit yesterday; will stock bounce back today?

Wall Street has not responded positively to Facebook's $2 billion acquisition of virtual reality company Oculus VR, maker of the popular--and still unreleased--headset the Oculus Rift.

Facebook shares closed yesterday down a hefty 6.94 percent to $60.38. The market opens today and 9:30 a.m. We'll update this story later in the day if shares bounce back...or fall further.

Mark Zuckerberg says his company's acquisition of Oculus VR is a long-haul effort, one that enable virtual reality to become the most social platform in history over the next ten years. During a conference call Tuesday discussing the surprise deal, Facebook management pointed out that its business model for the tech will drive revenue through software, services, and advertising, not the sale of the hardware itself.

In a note to investors this week, Sterne Agee analyst Arvind Bhatia rated Facebook stock a "BUY."

"We think the rationale is if Facebook can own the pipe, the platform, or the operating system of the future, it will have much greater control over its destiny," Bhatia said.

For more on Facebook's acquisition of Oculus VR, check out GameSpot editorials from editors Peter Brown and Tom McShea.

Got a news tip or want to contact us directly? Email news@gamespot.com

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eddienoteddy

Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
127 comments
berserker66666
berserker66666

From Facebook to Facebook VR. Now with VR ad support.

Merseyak
Merseyak

haha love it they basically tied an anchor around there ankles VR WONT HAPPEN to many bad effects from it you dont play a game to get a splitting headache or think hmm feel like playing a game better take my sea sick tablets lol

hystavito
hystavito

"We think the rationale is if Facebook can own the pipe, the platform, or the operating system of the future, it will have much greater control over its destiny,"


That sounds like a scary dystopian future :).

noandno
noandno

"Mark Zuckerberg says his company's acquisition of Oculus VR is a long-haul effort, one that enable virtual reality to become the most social platform in history over the next ten years. "


NONONONONONO!!!!!!!!!

gamingfriendly
gamingfriendly

Diediediediedie diiiiiiiiiiieee *bang* bang* *bang* *bang* eh not gonna happen.

mikz_nyc
mikz_nyc

Didn't this ass-wipe zuckerberg  say that they will leave oculus developers to do their own thing but now they say : "Mark Zuckerberg says his company's acquisition of Oculus VR is a long-haul effort, one that enable virtual reality to become the most social platform in history over the next ten years. During a conference call Tuesday discussing the surprise deal, Facebook management pointed out that its business model for the tech will drive revenue through software, services, and advertising, not the sale of the hardware itself"...so they're basically lying people straight in the face?..wow 

Hurvl
Hurvl

Who knew there were so many sceptics among facebook's stockholders, lol. That faceless (but not facebookless I assume) mass often seems to be at odds with the common person, only caring about what will make the stock price go higher, much like the CEO of big evil companies. Quality products is good, but profiting is better. Oh, well, this won't affect anything.

thermalmotion
thermalmotion

In other words, the payout isn't worth 2 billion any more

grbolivar
grbolivar

The smart-*ss(es) that invented Oculus Rift just cashed-in $2 billion using the money of all the idiots that "donated" haha

Thanatos2k
Thanatos2k

Can you blame them?  Oculus Rift has no revenue stream and there's no possible way they'll make back 2 billion.  Shareholders should not stand for Zuckerberg throwing their money away on something that has nothing to do with the business he's supposed to be running.

vackillers
vackillers

If you ever wondered why people are so mad about this whole situation then Zuckerberg said it best himself:


Mark Zuckerberg says "his company's acquisition of Oculus VR is a long-haul effort, one that enable virtual reality to become the most social platform in history over the next ten years"

 

guysmith1972
guysmith1972

I miss the days when buying hardware meant that you bought hardware. These days too many things are forced on us as services. I doubt very much that I'll be buying a Rift now that Zuckerberg has flat out said that the device won't be sold for a profit; this means that it will have riders that I clearly would not want to spend money on otherwise.

platinumking320
platinumking320

How's it feel getting at the top of the google news tech listings eddie?

Kayweg
Kayweg

That's not all that surprising imo.

This is not the first time VR gaming has been labelled the "next big thing", and so far it never took off.

And the OR is still a technology very much in development, yet without a single retail unit sold to show for.

So of course investors are sceptical, if i was one i would be too.

The good news is, with all that money spent, they now are "doomed" to make it a success.....and at the end of the day that really is what we hope for, right ?


sirkibble2
sirkibble2

Of course shares dropped. It's VR. It's still this nebulous, sci-fi fantasy that a niche group of people want. Until Facebook and the Rift team make it desirable to the mainstream, perception and shares won't improve. 

FULGOREY2K
FULGOREY2K

in the voice of Nelson Ned from the Simpsons:


HA....HA!!!

vought
vought

I hate facebook.  What a waste of time.

linthes999
linthes999

Welp, that $1.6b in facebook shares that Bleszinski received for OR, just got a heck of a lot smaller.

ziproy
ziproy

Look at that decline, there's no way that's going back up any time soon, at least in a worthwhile way.


Good to know that everybody, even the corporate suits of Facebook are enraged by this. One of the worst business decisions in the last decade.

atopp399
atopp399

I don't think VR will take off any more than 3D gaming. Though I am glad there are other VR head sets being developed now that the cancer Facebook took over Oculus.

DuaneDog
DuaneDog

I'm going to add. Facebook is far more developer friendly than Sony, Apple or Microsoft. Right now you can go to Facebook, fill out a form... and within a few minutes you have everything you need to build applications to integrate with Facebook. Facebook also doesn't take a cut from your game. They will however share ad revenue with you. 


With Apple, you have a $99 fee, they take a cut of every application you publish and there is no way around it. If you want a game on the iPad, they take a cut. They won't even tell you how much up front how much they will take exactly. You find that out after you are moving into approval mode. In other words, to build games for Apple not only you do pay to get the kit, you have to build the entire game and submit it before they will even tell you exactly the cut they plan to take. 


So knock Facebook all you want... but they have always been quite open with developers. If that is true with the Oculus thank god they got it and not Apple. You would have to pay to write a game for it and pay them a cut of every game.

DuaneDog
DuaneDog

I have an Oculus developer kit. My take is that Facebook is not a bad direction give where the technology is at today. It's cool technology and definitely makes VR a viable thing... but it's cool like Kinect is cool. It's social / novelty cool and will likely have better fit in more leisure activities like doing a little virtual travel thing with your friend or looking at a house you may be interested in purchasing. Perhaps play a game for 20-30 minutes.  


I don't see serious gamers playing an Oculus for 10 hours a day. It has to do with lag and even with the best possible specs we are looking at 20ms lag from the time your head turns to the time the screen can update. The current Oculus I believe is pulling about 40ms in the developer kit. To get real AAA performance that you would need to have this be core gaming technology you need closer to 5 ms to play it for hours on end. You will get motion sick playing at current lag rates. BTW, to completely fool someone between virtual reality and real reality the lag would need to about 2ms. At that speed your mind would be almost unable to tell the difference if the resolution was high enough.

Daian
Daian

Good. That is all.

AluminumAndroid
AluminumAndroid

Facebook is dieing and Zuckerberg is in a desperate attempt to keep it relevant. I hope the fall is swift.

endorbr
endorbr

That's because investors are smart enough to smell the gimmick...

ExtremePhobia
ExtremePhobia

See, I would think this was a good move. Don't get me wrong, I don't see how this has anything to do with Facebook itself. But it's more than likely going to make them heeps of money down the road. The people aren't pissed at Facebook about this because for Facebook, it's a good move. It's what this purchase does to the product that people were expecting that everyone is concerned about.

graceful_goku
graceful_goku

Funny, Facebook doesnt force ads on the user, like other sites (including Gamespot ang IGN), and Zynga isnt even related to Facebook, they just use their services.

raiden_knight
raiden_knight

@kitmeep  actually according to marketwatch.com It's now down to under $1.4 billion.

HailHellfire
HailHellfire

@mikz_nyc  

yep, its gross. 

be sure to pass on that conference call as much as you can so that others can also hear it. 


my guess is that they will be making a hub for Oculus Rift, that will consistent of something like Second Life/Playstation Home. where it will have digital goods, ads, & Facebook all tied to it.i might be wrong in this assumption but thats what i see happening with what was stated in the conference call

West123
West123

@sirkibble2  how can they? most people wouldn't want to put that thing on their heads...its kinda like 3d tvs doomed because of the glasses 

MHzBurglar
MHzBurglar

@DuaneDog  


Honestly, I agree that Oculus going to Facebook is better than it going Apple.  But that's like saying that getting Gonorrhea is better than getting AIDS.  One may be less severe than the other, but neither is something you want.

cratecruncher
cratecruncher

@DuaneDog Yes, technical challenges like virtual lag are simply impossible to overcome.  Even with Facebook's deep pockets they should just give up.  Look at the failure of the Hoover dam or the Gemini/Apollo missions.  Technical challenges are impossible and only fools attempt them.

godhand1942
godhand1942

@AluminumAndroid  Who is it dying to? Until someone can convince ppl to delete their 1000 fake friends or move them somewhere else fb prob isn't going anywhere.

zeus_RO
zeus_RO

@AluminumAndroid Zuck has enough money now to never worry about having to do an honest days work ever. And neither do his kids (when/if he has them). He should just pack up and move on. Try something else. If nothing works, just enjoy life without the hassle of boards and investors.

ziproy
ziproy

@graceful_goku I can't believe this thread went on for so long. This guy is DEAD WRONG and we all know it, ignore him and move on....

Daian
Daian

@graceful_goku  that's bullshit, I get random ads that have nothing to do with my (tons of) likes all the time, even if I X them never to show me again.

ExtremePhobia
ExtremePhobia

@graceful_goku  And pages your friends have liked. And pages related to things you've liked. A lot of people here receive ads for all sorts of things. I receive ads for dating sites. I'm recently married and I've been in a relationship for 4.5 years. And I have NEVER liked dating sites or anything of their nature. Why then do I have ads from them.

The untargetted ads on any number of gaming sites is infinitely more accurate than anything facebook has ever shown. I had a friend's anniversary ruined because Facebook decided to advertise to his girlfriend about tickets that he had just bought for a concert he was surprising her with.

How you managed to get rid of ads shy of an ad blocker is beyond me.

Anigmar
Anigmar

@graceful_goku I get ads everyday on the right side. From online games to shoes, and even stupid sexual dating sites.

mikz_nyc
mikz_nyc

@HailHellfire @mikz_nyc  You know what elders used to say where i come from : " A lie has very short legs",means no matter how much you try to lie  you'll get caught

godhand1942
godhand1942

@MHzBurglar @DuaneDog  With Sony's Morpheus on it's tail, Microsoft't own technology and the patents those two hold, frankly Oculus was going to get a disease no matter what.

ziproy
ziproy

@zeus_RO @AluminumAndroid He made Facebook public about two years ago. He willingly chose to introduce boards and investors so anything that comes of it is his own fault. He could have kept sole ownership if he wanted, he just wanted more money.


Thankfully FB is a terrible stock to buy right now and always has ever since it went public. People hate and resent it now, except for that lowest common denominator

jaylikebird
jaylikebird

"...except for that lowest common denominator"

aye, there's the rub. er, the easy money with a cultural trash heap left over. hate? resent? online video poker? how could someone be that stupid? line up, dimwits.

lyricalsoldierb
lyricalsoldierb

@graceful_goku @Anigmar statefarm.com gulf states Toyota att internet and soldier inc. 


none of which are pages I've liked.  all of them on the side of my facebook as we speak.

feeb1e
feeb1e

@graceful_goku You can hide all ads from that vendor, but new vendors can still advertise to you.  I'm not seeing any option to hide all ads.  It also makes me take a survey for each one, and I assume if I don't fill complete it, ads from that vendor won't be hidden.

Facebook has to make money somehow.  Period.

graceful_goku
graceful_goku

@feeb1e @graceful_goku  there is an x in the to right corner of the ad, click it then an optiopn to never have ads again will show up.


Have a nice day.

feeb1e
feeb1e

@graceful_goku That's not true at all.  Facebook shows you ads based on the things you've liked, and the personal information you provide.  Granted, the less you provide, the less hits you receive from targeted ads, but advertisers can still push ads out to all users (at a pretty hefty cost).

I think the point you want to make is that every free service out there uses ads.  Otherwise, those services wouldn't be free.  Nobody if forcing people to use Facebook.  The same people that complain about all the ads in their face, would likely complain louder if the products and services they now get for free became paid services.

korvus
korvus moderator

@lyricalsoldierb Well, he might be right, you never know. I only use FB to make sure my wife's professional page is spam free and even though I only log in once or twice a week I've received 3 layout updates than my wife (daily user) hasn't. Maybe goku received one we haven't =)

korvus
korvus moderator

@graceful_goku Then you need to teach people how to select your layout because I just unburied my account to see if anything had changed and half of the screen is covered in ads...