With the value of Meta Platforms (NASDAQ:META) recently cut in half from when it was called Facebook, CEO Mark Zuckerberg is hyping the metaverse, and analysts are buying it.

The virtual reality platform in which people could live and work intimately from wherever they are, will have a billion people spending hundreds of dollar each, he predicted.

The entry point is the Quest 2 headset, currently on sale at Amazon (NASDAQ:AMZN) for $300. Current applications are mostly games but that will change as the software develops.

The focus on the metaverse, which Zuckerberg admits is losing money, lets the company ignore slowing growth and controversies at its Facebook and Instagram. The question for investors is whether it will work.

META Stock and Facebook Reality

There’s no doubt that Meta’s growth stalled. March quarter revenues of $27.9 billion were well below the previous quarter’s $33.7 billion. Net income of $7.5 billion was down 27% from the December quarter. Operating cash flow was down 22% at $14 billion.

Meta still had $44 billion of cash and securities on March 31, and the company doesn’t pay a dividend. There is no doubt that Zuckerberg can fund this effort for years.

But it’s taking a toll on shareholders, and on Zuckerberg’s personal fortune. He has fallen out of the top 20 in the Forbes 400 and is now worth $57.2 billion, about $3 billion more than Michael Dell of Dell Technologies (NASDAQ:DELL).

The dog-and-pony show did seem to put a floor under Meta’s value. You can now buy it for less than 12 times last year’s earnings and just 3.6 times sales. That’s dirt cheap considering it still brought almost 27% of revenue to the net income line in what a “down” quarter, after growing 37% at scale during 2021.

Meta Promise

Investors don’t buy yesterdays. They’re deeply skeptical about Meta’s tomorrow.

The company’s payment system has been rebranded as Meta Pay, offering what it calls “proof of digital ownership” in the new metaverse. Too bad digital coins and NFTs have all crashed. The company has also joined a standards group from which Alphabet (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) are notably absent. The Meta future is built around its headset, a technology the company paid $2 billion for back in 2014.

Critics charge the whole thing is an effort by Zuckerberg to build an operating system under his control, absent the privacy issues that have hurt recent advertising efforts. Others, who can accept the entertainment possibilities, don’t get the business application. Still others note that this changes the subject away from Facebook’s use in politics.

Meta’s current business is built on its 15 cloud data centers, most of them in the U.S., and free services delivered largely to the developing world. In theory, the metaverse would let a Nigerian programmer appear as the equal of one in Cupertino, but Facebook and Instagram already do this. The headset, and the broadband driving it, would also be unaffordable for much of the current audience.

The Bottom Line

Zuckerberg claims he’s creating something as big as the iPhone. But a demonstration, no matter how impressive, is just a demonstration.

Meta should bring in $28 billion to $30 billion during the current quarter, equal to last year’s second quarter, when it next reports July 27. Analysts expect $2.57/share of earnings. Average monthly users should be flat, owing to its exit from Russia.

That would be impressive, except as a shareholder you don’t get to decide what happens to all that money. Mark Zuckerberg does, and he’s sinking it into a risky venture with no guarantee of success.

If he’s right, this is the most exciting investment opportunity in years. If he’s wrong, there is still the base business and its data centers. This is a speculation for young investors that we oldsters should avoid.

On the date of publication, Dana Blankenhorn held a long position in GOOGL, AAPL and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com, tweet him at @danablankenhorn, or subscribe to his Substack.