Gene Munster: The Amount Or Resources Facebook Is Putting To VR, Bodes Well For The Company For The Next Couple Of Years

Shares of social media giant Facebook Inc FB spiked up on Tuesday on back of a note published by Piper Jaffray analyst Gene Munster which highlighted that the company is investing and hiring new talent for its various businesses like Oculus Rift for future growth. Munster was on CNBC to explain the methodology he used to come to that conclusion and share his outlook on the stock.

The Methodology

"I was scrubbing LinkedIn profiles," Munster began. "And it's not a perfect science because some people work on virtual reality, augmented reality [for] try to keep things under cover, they won't disclose that. But we figured that's kind of a level playing field and ultimately Facebook has about 350 t0 400 people who are working on virtual reality. The next biggest company is HTC with about 2(00) to 250."

He continued, "So, they have got a nice lead and more importantly this is a huge theme that's going to be coming down the pipe over the next 10 years, this whole virtual and augmented reality. And the amount of resources that Facebook is putting to it today, I think, bodes well for the company for the next couple of years."

A Real Theme

Munster was asked if his estimate that Facebook would be launching its virtual reality products soon is baked into Price Jaffray's $146 price target for the stock. He replied, "We don't. This is about the multiple going up and investors trying to understand that this is not 3D take two, this is a real theme and we think the shares are going to appreciate based on a higher multiple."