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Facebook Inc (FB) Sets Its Sights On “Social” VR Going Into Earnings

Facebook Inc (NASDAQ:FB) keeps growing and stretching, pushing its boundaries beyond social networking into new areas in a practice investors love to own a piece of because it means new revenue streams. Indeed, the company seems to be following a business model that is rather Google-esque in that it’s talking about gadgets such as virtual reality in addition to online services.

Facebook Inc (NASDAQ:FB) also seems to have replaced Apple as the tech company that can do no wrong, although Amazon is certainly vying for that title as well.

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One of Facebook Inc (NASDAQ:FB)’s newest efforts is virtual reality through the Oculus headset company it acquired, and it held its third annual Oculus Connect conference in California this week. The company announced that it will release the Touch controller, which will feature a second tracking camera, priced at $199 on December 6. It is also pulling in developers by doubling its investment to $500 million aimed at convincing developers to create more content for the Oculus platform.

Jefferies analysts note that the new Touch controller feature a number of features the HTC Vive’s controls lack, such as pressure sensitivity for the handles. Also the controllers are bringing the ability for users to see their fingers move in virtual reality. When the Touch launches, there will be 35 titles supporting it, although that list keeps growing.

Jefferies analysts also noted that Facebook CEO Mark Zuckerberg highlighted that they wanted to make virtual reality into an “immersive social experience.” Indeed, this seems like an odd comment aimed at trying to make VR seem like a social experience when in fact it is not. There’s nothing social about having a headset attached to your face, blocking out the entire world around you as life passes you by and you don’t feel the physical contact that is a hallmark of truly social experiences.

Of course the idea is in line with what Facebook Inc (NASDAQ:FB) itself is all about—a social network designed to help people connect even though studies show that people actually feel quite alone and, in some cases, depressed when they use it.

In the case of Oculus, users will create avatars to interact and make them feel immersed, enabling users to play games together and also travel to real places. So while Facebook Inc (NASDAQ:FB) may be trying to force a social “feeling” into the VR headset, at least the ideas it is working with are quite fascinating.

Facebook Inc (NASDAQ:FB) is set to release its third quarter earnings report on November 2 after closing bell. Of course it is still much too early to expect much impact from Oculus, but this is an area that will grow in importance. William Blair analysts are expecting “at least an in-line quarter” on ad revenue. Consensus stands at $6.69 billion, representing a 56% increase from last year.

They note that on average, the social network has beat on ad revenue by an average of 6% over the last four quarters, but they believe that such beats will become harder to come by. However, they also note that they made the same comment before the last earnings report but were proven wrong. Facebook Inc (NASDAQ:FB) is also up against more difficult third and fourth quarter comparisons.

Facebook Inc (NASDAQ:FB) shares edged higher by as much as 0.19% to $128.99 during regular trading hours on Friday. The William Blair team expects the stock to trade up closer to their historical average multiple of 18 times EBITDA, which suggests that it could rise by about $20.