CLSA Internet analyst James Lee Monday opined that Facebook‘s (FB) chances of operating in China are improving, and that the first entry for the company may be its virtual reality unit, Oculus.
Lee, who has an Outperform rating on Facebook stock, and a $161 price target, describes in broad strokes a recent trip to China and to Korea, where he heard of a softening stance on the part of the Chinese government:
“We believe that the Chinese government is becoming more open now to an FB entry into the country. Our checks show that the leadership has a positive impression of FB given frequent visits by senior management and the company’s commitment to the export advertising business. We view the flagship product that will enter China as likely gaming through Oculus. The open VR platform should accelerate the development of the next-gen online gaming in China and investments in startups. That said, we think Baidu is the most logical JV partner as it is the largest Chinese search engine that can leverage its cloud offering for gaming and set up a potential entry for the core FB user interface (UI) into China.” Read More