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Yes, the Facebook stock price has been volatile over the last 12 months, trading at a 52-week range of $72.00 to $117.59.
Facebook Inc. (Nasdaq: FB) reported strong earnings in Q4 2015, and the Facebook stock price opened at an all-time high of $115.27 on Feb. 3 following the report. But since then, the FB stock price has dropped 7.09%.
But before I get to that, I want to make sure that Money Morning readers know why the Facebook stock price has been so volatile…
Members of the technology stock group known as FANG (Facebook, Amazon, Netflix, and Google) have been hit hard in 2016. FANG stocks have dropped an average of 9.78% this year, while the Dow Jones Industrial Average and Nasdaq are down 5.20% and 9.35%, respectively.
The slowing of the Chinese economy, volatile oil prices, and concerns that the federal government will enact negative interest rates are all contributing to the instability of the FB stock price right now.
Facebook stock has not been immune to the broad issues in global markets, and investors are concerned that the company may be in a tech bubble.
Recently, Stuart Varney of FOX Business even asked Money Morning Chief Investment Strategist Keith Fitz-Gerald if the tech bubble was about to burst.
Fitz-Gerald took issue with the word bubble, and he believes that the current sell-off is just an "unwinding."
"It's logical for big pension funds, for banks, for hedge funds to want to take some money off the table in the face of uncertainty over China and oil," Fitz-Gerald stated.
Fitz-Gerald actually views this as a buying opportunity because Facebook is:
- Growing its customer base
- Growing demand
- Growing business
The Facebook stock price today is mostly flat, and it may remain volatile in the short term along with the broader markets. But this $150 billion catalyst is going to make the Facebook stock price skyrocket in the long term…
The Facebook Stock Price Will Climb Because of Oculus Rift
On Feb. 21, Facebook announced that it was going to form a "Social VR" (or virtual reality) team. This team will build technology that creates new experiences for Facebook users, according to Forbes.
But of course, Wall Street missed the bigger picture from this announcement…
Facebook has its own virtual reality platform, Oculus Rift, which was just made available for pre-order at the beginning of January. Rift costs $599 and will begin to ship in March. We believe that this will add a tremendous amount of revenue to Facebook's bottom line. And that's not even what has us most excited.
The bigger news is that Facebook announced at Samsung's Galaxy S7 event that it was going to build technology that creates new ways for people to have social experiences in virtual reality, according to Forbes.
Why is that so important? Virtual reality is becoming a new space for advertisers.
While establishing a profitable model from virtual reality advertising is still in its infancy, the early model for monetization is that advertisers will pay to sponsor an experience. The technology would allow you to simulate real-world interactions. You could virtually sit next to a friend or participate in an activity with them through Facebook, and an advertiser may be willing to pay to sponsor those interactions for branding purposes.
The Coca-Cola Co. (NYSE: KO) acted as an early adopter of the technology and its advertising in 2014. Coca-Cola created a virtual reality experience at the World Cup where users could visit a locker room and play on the field.
CEO Mark Zuckerberg expanding his reach into the budding industry is just one of the many examples of his forward thinking.
While virtual reality is mainly associated with games right now, he sees the technology being used well beyond games.
"After games, we're going to make Oculus a platform for many other experiences," Zuckerberg stated in a Facebook post. "Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world, or consulting with a doctor face-to-face – just by putting on goggles in your home."
By 2020, research company Digi-Capital projects that the augmented reality/virtual reality market will bring in $150 billion in revenue. When you consider that Facebook has several outlets to make revenue through virtual reality, including Instagram, WhatsApp, Messenger, and its flagship site, there is a huge opportunity for the company.
And any dip in the Facebook stock price now makes it a great buying opportunity for long-term investors.
The Bottom Line: The Facebook stock price has been volatile in the last year because of broader market volatility. FB stock is not immune to sell-offs in the global markets, but it still has strong fundamentals and great leadership. CEO Mark Zuckerberg identified virtual reality as a huge catalyst for revenue growth, and he is building a strong foothold in an industry that is projected to bring in $150 billion in revenue in the next four years.
Protect Your Money in This Bear Market: It's true that you would have to be a fortune teller to know exactly when a bear market would start and end. But fortune telling isn't Chief Investment Strategist Keith Fitz-Gerald's profession. His goal is to protect your wealth, maximize gains, and help you focus on what's really going on in the market. In his Money Map Report, this financial guru has used his years of experience as a trader in one of Wall Street's leading firms to help his readers find 86 double- and triple-digit winners. You can learn more about Keith's Money Map Report here…