Investors Unsure of Facebook's $2 Billion Virtual Reality Acquisition

Facebook's big purchase of Oculus VR has people on Wall Street wondering why?
3:00 | 03/26/14

Coming up in the next {{countdown}} {{countdownlbl}}

Coming up next:

{{nextVideo.title}}

{{nextVideo.description}}

Skip to this video now

Now Playing:

{{currentVideo.title}}

More information on this video
Enhanced full screen
Explore related content
Comments
Related Extras
Related Videos
Video Transcript
Transcript for Investors Unsure of Facebook's $2 Billion Virtual Reality Acquisition
Michelle Franzen a new York and that the financial markets closed for Wednesday march. The stock story. And -- stock with a story today is FaceBook investors are not liking the social media giants two billion dollar purchase. A -- VR of virtual reality gaming company that is built a prototype of what it hopes to be the future of gaming. Complete Immersion but investors not -- sure what FaceBook would or could do with it. To break it all down I'm joined now by -- MacKey from -- who financed Jeff. What is -- populous rift and why do you think FaceBook wanted. Well right. Now what it is is kind of a huge piece of plastic that you -- your head -- makes it feel like you're having actual experience. I think baseball wanted to it just -- Zuckerberg wants to just kind of kill everything in the crib if he can have it no one can. The idea is is it's been around forever I'm sure you've seen and I've seen it it's just kind of an immersive experiences you say. -- this right now it's largely just a prototype and so they've done things like going up and down roller coasters and all these moving. Type of experiences you obviously can't see it through computer -- -- you have are just images and videos of folks kind of looking around like this with a huge plastic thing -- that are -- And you know speaking of roller coasters let's take a look at how faithful -- is doing today down nearly 6%. Jeff investors really not pleased about this. Yeah -- at what virtual reality hasn't said it's been around for very very long time and. It's a lot of money to billion dollars is quite expensive and Wall -- a little worried that Zuckerberg Mark Zuckerberg of course. Is going and just too many directions it seems kind of a leap of faith to understand how FaceBook gets from where they are today which is a social network a nice place share pictures. To someplace where you're using immersive lifelike images and viewing and putting a pair of binoculars on her head. Wall Street not that excited about it it's not so much the two billion itself it's just kind of confusion over the direction that Mark Zuckerberg sees FaceBook going which apparently is everywhere. Was it that this acquisition took everyone by surprise no build up no one was expecting this. It's really from far -- I don't think anyone was expecting it. -- argue this is gotten some -- we've been reading about in the financial press for the last few weeks which and Internet days as a long time. Just in terms of it finally being a technology a version of virtual reality that works a little bit in the sense that. The prior generations ever really kind of made in Austria she didn't quite have the right synchronicity between -- -- I was seeing -- higher plane felt. So it's neat that it works pretty well but investments Wall Street didn't again see -- Facebook's image make any money off this. How it fits in the FaceBook plan and why Zuckerberg would go on spend two billion dollars -- Alice so folks are kind of fallen in the town's little bit you know mark. -- posted his reasoning behind the purchase on FaceBook lets take a look at -- quote. -- an immersive gaming will be the first populace already has big plans here that won't be changing and we hope to accelerate. But this is just the start after games we're going to make -- as a platform for many other experiences. Imagine and join a courtside -- -- -- study in in the 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. Jeff that doesn't seem so out of place for FaceBook -- and these goggles kind of found close to Google. Yeah -- -- me down the sky to earth Wall Street not feeling very imaginative today apparently Michelle. They -- of glass is there observed the next step and -- -- I guess. And Zuckerberg it's easy for him I guess to imagine but you know -- are run an airline -- -- -- outside things as opposed just sitting in my basement a virtual world. I'm not scared just yet it seems very very far out there even for visionary like Zuckerberg. To see again how this works with FaceBook and why you'd be consulting a doctor for your FaceBook connection and why you would need these particular goggles to do -- So I heights again were really really way out there for how profitable this can be. And why Zuckerberg won't wait for few years and let this play out and then -- two billion dollars -- -- -- four billion or six billion let someone else have the risk that's not so clear. He must have some ideas one issue though investors have with this purchase is the lack of revenue but a look at Facebook's. Big purchases in mr. Graham for one billion dollars judging what's that for nineteen billion dollars to change. And now -- BR for two billion dollars -- none of these companies make money. Why is FaceBook shelling out such an absurd amount of cash there has to be -- idea behind. Well there is an idea it. Parents again they're growing like an -- which is just sort of -- -- out and taking everything. Now keep in mind that Michelle they paid 400 medley and he's my numbers just sound silly come out my mouth so but it paid only 400 million in cash wrestler isn't Facebook's stock again it's 23 dollars. 400 million for what amounts to an idea and some binoculars right now. But at the rest of it was in stock and so that allows FaceBook. To really -- for for much bigger dollar -- suspend bigger dollars for these type of acquisitions that sad. -- you have to have a family coming together against -- actually worked out pretty well. What's out for nineteen billion that was aggressive and this purchase coming right on the heels of what's -- while all the sudden hear about -- -- -- 21 billion dollars in June these experiments. You don't have a lot to show for Wall Street's kind of cool with the idea of not having revenues just yet. But there has to be something beyond imagining you have courtside seats are talking to a doctor in the financial future for these firms before even Zuckerberg gets the benefit of the doubt. Okay investors aren't sold on -- what should gaming console makers like Sony Microsoft and Nintendo. Be making -- this purchase. What you'd think they'd be afraid -- -- Sony has something that seems like it's going to be competitive. Already in the works are being buzzed about with Sony you're never quite sure how that's going to play out. But that illustrates part of the wrong with the Zuckerberg purchased it's a game -- they have that poitier and aired doesn't seem like they should be all that worried. And if they can make a product that is virtual reality like. While the pay licensing fees so I don't think Microsoft or Sony should be that worried about I'm not sure who. Could actually be very concerned it seems like just kind of shiny toy. For Mark Zuckerberg and the gang at FaceBook to play with for now he's a really Smart guy -- -- is done neat things before so. -- -- it'll probably play out by its Wall Street right now again not feeling very imaginative. Yeah yeah now there is a time when we did know about FaceBook either so -- watching Jeff MacKey of Yahoo! finance thank you for joining us. And of course you've been watching story stocks they would abcnews.com. For your latest headlines I'm Michelle Franzen the New York.

This transcript has been automatically generated and may not be 100% accurate.

{"id":23071710,"title":"Investors Unsure of Facebook's $2 Billion Virtual Reality Acquisition","duration":"3:00","description":"Facebook's big purchase of Oculus VR has people on Wall Street wondering why?","section":"Business","mediaType":"Default"}