With 2016 being the year that virtual reality makes its way into the mainstream, many readers are wondering how they can make money in the space themselves. While there are a number of companies directly involved in virtual reality headset manufacturing, there are also a number of companies looking to profit in other ways. Below are a handful of ways that virtual reality enthusiasts can wager their own cash on the future of the industry via the stock market:
Although Sony’s Playstation VR headset is still months out, many analysts predict that they could be the company to benefit the most from the enthusiasm within the market. The PS VR headset is much more affordable than competing headsets, such as the Oculus Rift and HTC Vive. Additionally, there will be close to 40 million Playstation 4 consoles in the hands of gamers by the end of this year, meaning that for a bulk of the gaming population additional hardware is not required as with other headsets. While PS VR’s impact from a revenue and profit standpoint will be meager at first on the company’s top and bottom lines, over the next year or two, it could boost Sony’s profits substantially. Unlike some of these other companies we will profile, Sony’s market cap is in a mid-range area.
HTC Corporation (2498.TW)
Although you will need to have access to the Taiwan Stock Exchange in order to purchases shares, HTC could be a solid play for the VR space. Although VR may make up a smaller portion of the companies business then it does for Sony, the profit margin ultimately could be higher for HTC. Also HTC’s Vive headset seems to be receiving solid feedback in the early going as the first units begin to ship this week. The company certainly has a head start within the industry along with Facebook’s Oculus Rift, and they have approximately six months all by themselves to garner market share prior to Sony’s entrance into the space in October.
Facebook’s purchase of Oculus back in 2014 for $2 billion may soon begin to pay dividends for the company. While Facebook is said to be expecting sales in excess of 2 million Rift units by the end of 2017, the impact on the stock from a successful launch could be lacking compared to others within the industry because of the immense size of Facebook’s market cap, which stands currently at $330 billion (10 times that of Sony). While it will be hard for the company to move the needle in the early going, within a longer time horizon Facebook is well positioned to take advantage of VR within the social realm, which could be huge. In fact, Facebook thinks that by 2020 they will have sold in excess of 25 million Oculus Rift headsets, while also banking big on software and games.
NVIDEA Corp (NVDA:Nasdaq)
NVIDEA is well positioned within the graphics processing unit (GPU) space, and virtual reality is heavily reliant on powerful graphics cards. This company can profit if they play their cards right, whether its Sony, Facebook or HTC ultimately winning out. If you are unsure of which headset may win out in the long run, this is a great shot to hedge your bets.
Samsung Electronics (Samsung Electronics Co. Ltd. (005930.KS)
Samsung is seemingly beating everyone else to the punch when it comes to smartphone-powered VR headsets. While there are rumors that Apple may soon enter the space, Samsung will likely have a 2+ year head start, which could be quite valuable in an industry that’s getting off to a quick start. While the Gear VR headset is already a success for the company, Samsung likely has much more up their sleeves when it comes to virtual reality. While the company is fairly large, and like Facebook requires substantial revenue to make even the slighted dent within their finances, they quickly are becoming a leader within this space.
While there are other companies which certainly will benefit from the rise of virtual reality, the above five, I feel are the best bets. Let’s hear your thoughts and feedback on VR Investing in the Virtual Reality Stocks forum on VRTalk.com.