These few years tuned to be revolutionary ones for virtual reality industry. Many IT companies are trying to secure the market share by spending hundreds of million dollars on developing newest VR products, such as virtual glasses. Let's look through the latest tendencies on this market and what impact it has over our lives?
Genuine engineers began their work on the development of VR-devices decades ago. But at that period of time there were no suitable software and hardware to provide a true virtual reality experience. It requires a huge number of tasks to be performed for so called tracking system. Attempts were made with a varying degree of success, and of course without commercial one, until modern era of smart phones dawned on us and provided an opportunity to make a long-awaited revolution. Developers have now access to advanced sensors and displays.
Right now users all over the world have an opportunity to «dive» into virtual reality experience by using your mobile device, PC and VR-headset. Google Cardboard turned to one of the first attempts to recreate virtual reality, with its lenses increasing tiny pixels of Smartphone screen into huge proportions. This relatively cheap device had lacked frame rate and was likely to cause dizziness to a human brain.
Oculus Rift and HTC Vive, from the other hand, made a next step in virtual reality development, with higher cost and better picture quality. Companies of both VR headsets made a statement that they will only focus on implementing their products in a gaming industry and plan to dramatically change the gaming experience. The players can now interact with the virtual world by using motion sensors attached to their hands.
Users review seems to be controversial, as many people after returning to the real world feel themselves disorientated and confused. There has been a lack of focus on the safety risks associated with large plastic glassed strapped on your eyes. Many health representatives emphasize that using VR headsets can cause severe eyestrain, nausea and motion sickness. From my point of view that will be the main obstacles for producers to overcome, as paying health reimbursements for potential lawsuit will draw away enormous amount of funds.
Consumer demand on VR products is rapidly growing this year, with projected 3,6 billion dollars sales worldwide, this number is expected to grow to 22.9 billion dollars by the end of 2020. Most likely, the VR industry will draw in more resources when all its participants have achieved concrete sales results and made profit. These investments will lead to more diverse content services for VR hardware, and the industry by then will become hot as its growth gradually accelerates and its previously small market expands.
Source: gameindustry.biz, SuperData report
Picture 1. Virtual reality video gaming sales revenue worldwide 2015-2020
Considering that Facebook has recently acquired Oculus company let's look at social network`s stock performance.
On the daily chart we can see a bullish trend, with a few trading signals on a chart. The main one is buy fractal level (121.26). However, I would not recommend to buy this stock at that price as the recent Q1 revenue and net profit were lower than the previous quarter. Also, VR products` share in company`s revenue is not yet perceptible.
Picture 2. Facebook Inc., Daily chart
HTC shares look more attractive from technical analysis perspective. The price has just passed the Alligator indicator moving averages with indicator Awesome Oscillator crossing its "zero line".
I would buy this stock at fractal level when there is a formed one on the daily timeframe.
Picture 3. HTC Corp., Daily chart
As impressive as the technology already is, many believe it’s still in its early days. That’s because previous virtual reality-style efforts have flopped in the past decades. But the latest VR products are seen as more promising, thanks to their much-improved graphics, head-tracking abilities and more.
If you look from investor`s point of view, I think it is worth checking out stocks of VR producers and placing them on a «holding pattern», considering that one year of positive results is not yet enough to make a confident decision about the future of this sector.
Oleksii Stanilevych, analyst
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