The Commonwealth Bank of Australia (ASX: CBA) share price is down around 0.6%. Australia’s biggest bank released an update about the government scheme loans for small and medium businesses to help them with the impacts of COVID-19.

Over the last year and a half, there have been huge impacts on various parts of the Australian economy. Government stimulus has been there to help households and employees.

But some businesses have needed more support than the cash support that was given by the federal and state government.

The government scheme loans

CBA gave an update today to say that more than 20,000 Australian businesses have received more than $1.98 billion in funding support made available through the Commonwealth Bank’s government-backed guarantee loan scheme to help them manage the impacts of the pandemic, recover and invest for the future.

The original scheme was started on 22 March 2020. That was essentially the bottom of the COVID-19 crash, when the CBA share price fell below $60.

The scheme has seen various developments since inception. This scheme was recently changed to allow any business impacted by COVID-19 with annual turnover of less than $250 million to borrow up to $5 million for up to 10 years at record low rates.

This help has been given to various industries over the past 18 months. CBA said the loans gave smaller businesses vital cashflow and peace of mind. Some of the businesses have used the cash to adapt to the current conditions. For example, they may have shifted online, or expanded the operations. Those businesses that saw increased demand may have allowed them to employ more staff.

The CBA gave an example of a meat wholesaling and retailing business which pivoted to online and allowed consumers to buy restaurant quality meat as well as the regular butcher products. Since then, it has done over 100,000 deliveries and now delivers to 92% of Australian postcodes.

The CBA executive general manager of business lending, Clare Morgan, said:

The impacts of the pandemic have been really varied for different businesses and different sectors, many require access to credit to help them through this period, and some are looking for additional capital to grow, invest and expand through recovery.

We plan to play a leading role in the expanded SME Recovery Loan Scheme as we’ve done through the various phases of the scheme and encourage businesses to speak with us about what might be suitable for their business needs.

What else may be impacting the CBA share price?

It’s true that CBA shares are down around 0.6%.

However, the overall ASX share market – the S&P/ASX 200 Index (ASX: XJO) – is also down by 0.54% to 7,397 points. So, CBA shares have largely tracked what the market has done today.

The bank has seen considerable growth in the shorter-term. In 2021 it has gone up by 20% whilst. CBA shares have gone up 55% over the past year.

The post CBA (ASX:CBA) share price slides amid upbeat $2b loan scheme appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Recessions have several causes, but one stands out in particular right now. According to the National Bureau of Economic Research, a recession can be caused by an overheating economy where demand outstrips supply, causing price inflation.

That scenario is eerily familiar to what is going on in the U.S. economy right now. Prices are going up broadly for things like used cars, fuel for your car, and vacation stays. Indeed, the U.S. Bureau of Labor Statistics reported the 12-month change in the consumer price index was 5.3% in August.

Although we are just rebounding from a recession caused by the pandemic, the economy can go into another recession not long after. Here’s why Netflix‘s (NASDAQ: NFLX) business could perform better than Disney‘s (NYSE: DIS) during the next recession.

Netflix is the lower-cost entertainment option

Netflix’s one business segment is its streaming services, which range in price in different regions. Common among all regions is that you can be a subscriber for less than $1 per day. It has enough content to entertain the family, and it constantly updates the service with new and changing movies and shows. Therefore, if your income is falling during a recession, one of the last things you will cancel is probably the Netflix subscription.

By contrast, Disney has a broad business empire that includes theme parks, resorts, cruise ships, and merchandise in addition to its streaming services. It’s no secret that a visit to a Disney theme park can be pricey. Any of my readers who have taken a family trip to one of them need no convincing of that. It’s more likely that when family incomes are falling during a recession, a trip to a Disney park gets delayed or canceled altogether.

It’s a trend that harms Disney more than Netflix. Even though its theme parks were severely constrained in the most recent quarter, the segment still brought in 34% of Disney’s overall revenue. Sure, it would be fun to visit Disneyland or Walt Disney World, but when incomes are falling, the most fun thing is not what always gets chosen. Unlike during expansions, in recessions folks choose the option that costs less. For that reason, Netflix is more recession-proof than Disney.

What this could mean for investors

For those following Netflix and Disney, this is a thing to watch. If you own Disney stock, be aware that revenue could temporarily dip during a recession. That awareness should help you cope with increased volatility in Disney’s stock price during that time.

Netflix’s revenue and profits are not likely to decrease significantly. If its stock price crashes as the market sentiment turns sour in a recession, it could be an opportunity to buy the stock.

Still, investors should evaluate the companies when the time comes, but awareness of how consumers might respond in different economic scenarios is a good planning exercise to undertake.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Here’s why Netflix is more recession-proof than disney appeared first on The Motley Fool Australia.

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Parkev Tatevosian owns shares of Walt Disney. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Netflix and Walt Disney. The Motley Fool Australia has recommended Netflix and Walt Disney. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The PointsBet Holdings Ltd (ASX: PBH) share price is fast approaching 12-month lows after sliding 16.7% year-to-date and down more than 40% from its February all-time highs.

At the time of writing, PointsBet shares are trading for $9.62, down 3.9% from yesterday’s closing price.

Let’s take a look at some potential factors that may have stunted shareholder value for PointsBet.

What’s weighing on the PointsBet share price?

Immense cash burn

PointsBet represents one of those loss-making, high growth narratives.

While many loss-making companies might take a more disciplined approach to capital management or making strides towards profitability, PointsBet has seen its losses balloon.

In its FY21 results, the company reported a 159% increase in revenue to $194.7 million. This was driven by a triple-digit uplift across key trading metrics such as betting turnover and active clients.

However, its strong growth came at a hefty price tag.

PointsBet reported a 314% increase in losses from $39.7 million in FY20 to $164.3 million in FY21.

Capital raising overhang

PointsBet has actively tapped into the pockets of its shareholders for more capital to sustain its growth trajectory.

The PointsBet share price made its debut on the ASX in June 2019 after successfully raising $75 million at $2.00 per share.

The company initiated a $122.1 million capital raising in October 2019 to fund its marketing, technology and US business development endeavours.

PointsBet raised another $303 million in September 2020 following its transformational deal with NBC Sports in the US.

More recently, PointsBet raised $400 million in August to further its US growth plans.

Weakness in broader tech

The ASX tech sector has struggled to outperform the broader market in 2021.

The S&P/ASX 200 Info Tech (INDEXASX: XIJ) is up 4.6% year-to-date compared to the S&P/ASX 200 Index (ASX: XJO) which has rallied 10.7%.

Many leading ASX 200 tech shares such as Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and Xero Limited (ASX: XRO) have largely flatlined in the past few months.

The underperformance of tech and high growth names could be another factor weighing on the PointsBet share price.

The post Down 4%, why the PointsBet (ASX:PBH) share price is close to 12-month lows appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Pointsbet Holdings Ltd, Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Calix Ltd (ASX: CXL) share price is shooting straight for the moon. At the time of writing, shares in the materials company are trading for an all-time high of $4.61 – up 20.37%. That’s despite the S&P/ASX 200 Index (ASX: XJO) being down 0.48%.

The positive price movement comes after the company announced Carbon Direct Capital invested 15 million euros into one of its subsidiaries.

Let’s take a closer look at today’s news.

Calix share price rises on new investment

In a statement to the ASX, Calix says it has received a 15 million euro investment in its subsidiary LEILAC Group. The investor, Carbon Direct – which Calix describes as “one of the world’s leading decarbonisation investors” – will take a 6.98% stake in the business. LEILAC Group is focused on carbon dioxide capture technology.

As part of the deal, Calix has entered into a licence agreement with the LEILAC Group where it will retain 30% of royalties earned by the LEILAC Group from the deployment of its technology. This will be regardless of Calix’s equity stake in LEILAC.

At the same time, LEILAC will become an autonomous business with its own management and board. All board members, bar one, will be Calix directors. The remaining member will be appointed by Carbon Direct.

LEILAC Group is the licensee of Calix’s Low Emissions Intensity Lime and Cement (LEILAC) CO₂ capture technology. The investment into this technology is clearly buoying investors, judging by the rising Calix share price.

Management commentary

Calix CEO Phil Hodgson said the deal represented a “critical milestone” in Calix’s stated strategy of seeking equity “farm-ins”:

As each of these businesses become independent commercial entities, they will remain ‘joined at the hip’ technically with Calix, which will continue to support development of the core intellectual property. Over time, growing royalty income from these companies will also support the development of new applications of the IP and associated technologies.

The recent Intergovernmental Panel on Climate Change (IPCC) report was unequivocal in saying that to reach the stated 2030 goals on climate change, CO2 emissions have to be reduced. LEILAC Technology is an option that is being deployed now to meet this urgent need.

Carbon Direct founder and CEO Jonathan Goldberg added:

We are very impressed by the technical and commercial rigour of the LEILAC team, and plant partners are outspoken in their excitement about LEILAC. We are delighted to support Phil, Calix, and the LEILAC Group as they seek to scale LEILAC into cement and lime plants around the world.

Calix share price snapshot

Over the past 12 months, the Calix share price has increased 407%. Year-to-date, it has risen around 332%.

Calix has a market capitalisation of approximately $715 million.

The post Why the Calix (ASX:CXL) share price is surging 20% to a new all-time high appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in Pilbara Minerals Ltd (ASX: PLS) have rocketed out of the starting blocks on Wednesday and set a new all-time high.

At the time of writing, the Pilbara Minerals share price is up 10.18% trading at $2.49, after hitting a record high of $2.53.

That means it’s gained around 185% this year to date, well ahead of the S&P/ASX 200 index (ASX: XJO)’s return of 12% since January 1.

Let’s investigate what’s been driving this outsized return over the last few months.

What’s been fuelling the Pilbara Minerals share price lately?

The Pilbara Minerals share price has marched northwards since January 1 this year, along with many of its ASX resources peers.

Interestingly, investors continue to reward the lithium miner, despite it posting a net loss of $51 million in FY21, alongside a 37% year on year decrease in earnings before interest, tax, depreciation and amortisation (EBITDA) in its FY21 results last month.

However, a number of external drivers appear to have fuelled momentum for Pilbara’s share price over the last few months.

Most recently, on 6 September, Pilbara announced a “further substantial increase” in the mineral resource at its flagship 100% owned Pilganogoora Lithium-Talium project in the Pilbara region, Western Australia.

The company advised that the 39% mineral resource boost brought the updated tonnage to 308.9 million tonnes, reinforcing the project’s position “as the world’s premier hard rock lithium operation”.

Pilbara shares have climbed a further 16% since this announcement.

Cool – but how can Foolish investors interpret this?

Because Pilbara Minerals is an ASX resource share that produces commodities, it is considered a price taker. That means its share price is sensitive to fluctuations in prices in the broader commodity markets – lithium in particular for this case.

The price of lithium has soared to 24-month highs this year, having jumped off the springboard in a 90% gain from January to April.

Since then, the spot price of lithium has only edged higher and maintained a level of above CNY90,000/Tonne (T) (AU19,100/T) to date.

With lithium continuing to fetch these high prices in the market, and with the company’s newfound payload, it begins to make sense why the Pilbara Minerals share price reached an all-time high today. Investors want in on the potential good fortunes of the company.

Over the last week alone, the Pilbara Minerals share price has climbed a further 16% into the green, as lithium prices crawl higher also.

What else could be behind Pilbara Mineral’s share price?

Recall that Pilbara completed the inaugural auction on its Battery Metals Exchange (BMX) platform in July. The BMX outlay is a platform in which Pilbara can sell its unallocated spodumene inventory, to drive additional sales volumes.

The results of its second BMX auction were released on Tuesday, and the company advised that there was “strong interest in both BMX platform participation and bidding within the auction”.

And Pilbara’s not done there, with the company already eyeing in on its next moves with its latest innovation to generate sales. “Given the strong margins yielded through the BMX trading platform to date, Pilbara Minerals expects to channel more concentrate through the platform,” the company said today.

The post Pilbara Minerals (ASX:PLS) share price rockets 10% to all-time high. Here’s why appeared first on The Motley Fool Australia.

More reading

• ASX lithium shares are rallying across the board today. Here’s why.
• Pilbara Minerals (ASX:PLS) share price on watch as lithium prices boom
• Here are the 3 most heavily traded ASX 200 shares so far today
• Lithium surge, Sydney Airport takeover, ACCC torches Qantas deal. Scott Phillips on Nine’s Late News
• Here are the 3 heaviest trading ASX 200 shares on Monday

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Metalstech Ltd (ASX: MTC) share price is surging today following news of a $2 million strategic investment.

The company has signed a strategic investment agreement with Chifeng Jilong Gold Mining that will see Chifeng subscribing to buy more than 5.8 million Metalstech shares for 34 cents apiece.

At the time of writing, the Metalstech share price has boomed to 42.5 cents, 19.72% higher than its previous close. Additionally, the Metalstech share price hit a new all-time high of 44.5 cents earlier today.

Let’s take a closer look at today’s news from the lithium and gold exploration company.

Metalstech’s new investor

The Metalstech share price is soaring this morning following its announcement of a significant strategic investment.

China’s Chifeng will be investing in Metalstech via its subsidiary Chijin International.

Metalstech will issue approximately 5.8 million shares to Chifeng before its planned spinout of Winsome Resources.

Winsome is to take over Metalstech’s lithium resources. The split will allow Metalstech to focus on its gold assets.

Metalstech shareholders will receive $9 million worth of Winsome shares – valued at 20 cents apiece – as part of the demerger.

After Chifeng receives its allocated new shares, Metalstech shareholders will get 1 Winsome share for (approximately) every 3.66 Metalstech shares they already hold.

That would see Chifeng with around 1.6 million shares in Winsome after the spinout. It is scheduled for 7 October and is subject to shareholder approval.

Additionally, Metalstech plans for Winsome Resources to float on the ASX after the spinout. Details of Winsome’s potential initial public offering (IPO) are yet to be announced.

Commentary from management

Metalstech chair Russell Moran commented on the news driving the company’s share price higher today:

Chifeng is widely considered to be one of the most succesful precious metals investors in China… We hope that this recent interest from Chifeng is a sign of growing interest in out broader development plans for [the Sturec Gold Mine].  

Metalstech share price snapshot

Today’s gains have seen the Metalstech share price well and truly in the green.

It is currently 107% higher than it was at the start of 2021. And it has gained 97% since this time last year.

The post Metalstech (ASX:MTC) share price surges 20% on $2 million investment appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Wesfarmers Ltd (ASX: WES) share price has kicked off to a poor start today. At the time of writing, Wesfarmers shares are trading at $56.25, down 0.85%.

Wesfarmers is now down close to 15% over the past month or so. Just last month, this company was clocking new all-time highs, eventually peaking at $67.20 a share around 20 August. But it has been a rather steep slide since then.

Although lower share prices can be disappointing for existing investors, they also mean a higher starting dividend yield for new investors. So let’s take a look at how the Wesfarmers dividend stacks up today.

When Wesfarmers reported its FY21 earnings report last month, it included a final dividend of 90 cents per share. This will be paid out on 7 October. That brought Wesfarmers’ full-year dividend to $1.78 per share for FY21, an increase of 17.1% over FY20’s payouts.

This full-year dividend of $1.78 a share gives Wesfarmers a dividend yield of 3.16% on current pricing, or 4.51% grossed-up with Wesfarmers’ full franking credits.

Those are some pretty healthy numbers, especially considering that interest rates remain at essentially zero.

But how do they compare to Wesfarmers’ peers? Let’s check out how this dividend stacks up against Wesfarmers’ old flame Coles Group Ltd (ASX: COL) as well as Coles’ arch-rival Woolworths Group Ltd (ASX: WOW).

How does the Wesfarmers dividend compare to Coles and Woolworths shares?

So Coles also announced a dividend increase in its FY21 earnings report last month. Coles announced a final dividend of 28 cents per share, to be paid out on 28 September. This will bring Coles’ dividends for FY21 up to 61 cents per share, a 6.1% increase on FY20.

This would, in turn, give Coles shares a dividend yield of 3.55%, or 5.07% grossed-up with Coles’ full franking. That’s slightly ahead of Wesfarmers, at least on today’s prices.

Let’s see how these two yields compare to that of Woolworths today.

Woolworths, not to be left behind, also increased its dividend last month during earnings season. It announced a final payout of 55 cents a share, to be paid on 8 October. That brought Woolies’ FY21 dividends to $1.08 per share, a 14.9% increase on FY20’s shareholder payments.

That would give Woolworths a dividend yield of 2.76% on current pricing, or 3.94% grossed-up with Woolworths’ full franking.

So out of Wesfarmers, Woolworths and Coles today, it seems that Coles shares offer the largest starting dividend yield based on the latest share prices.

At the current Wesfarmers share price of $56.25, the company has a market capitalisation of $63.78 billion, and a price-to-earnings (P/E) ratio of 26.75.

The post How does the Wesfarmers (ASX:WES) dividend compare to Woolworths? appeared first on The Motley Fool Australia.

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• Own Wesfarmers (ASX:WES) shares? It’s about to be payday…for you and the CEO
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The lithium sector is green across the board on Wednesday, with many ASX lithium shares marking fresh all-time record highs.

Lithium boom continues

Pilbara Minerals Ltd (ASX: PLS) is making headlines following the results of its second lithium spodumene concentrate digital auction.

The company said that it intends to accept the highest bid of US$2,240/dry metric tonne (spodumene concentrate 5.5%, free on board Port Hedland basis) for the intended 8,000/dmt cargo.

Just two months ago, Pilbara Minerals held its inaugural digital auction, with the highest bid coming in at US$1,250/dmt for a 10,000 dmt cargo of spodumene concentrate.

According to S&P Global, a China-based bidder said, “We started [bidding] at slightly over $1,100/dmt and we were expecting the price to hit a maximum of $2,000/mt. This [closing price] is a really crazy high one.”

With lithium prices rising rapidly in a short span of time, this could only mean good news for ASX lithium shares.

ASX lithium shares climb higher

Pilbara Minerals is leading the lithium sector on Thursday, jumping 9.73% to record highs of $2.48.

The Orocobre Ltd (ASX: ORE) share price is also basking in Pilbara Minerals’ success, adding 3.24% to $9.87.

Prospective explorers including Piedmont Lithium Inc (ASX: PLL), Liontown Resources Ltd (ASX: LTR) and Firefinch Ltd (ASX: FFX) are also pushing higher, up 3.31%, 3.39% and 3.76% respectively.

The Core Lithium Ltd (ASX: CXO) share price jumped the gun yesterday, rallying 27% on no news. It was pulled over by the ASX this morning in a price query.

In response, Core Lithium pointed to Pilbara Minerals’ auction results, saying:

Significantly, Core notes that yesterday, a spodumene concentrate cargo from another Australian producer sold for an approximate equivalent price of USD$2,500/dmt (SC6.0, CIF China). Core is the only Australia-focused, ASX-listed company forecast to join the ranks of new spodumene producers between now and the end of 2022.

It seems Pilbara Minerals’ auction results have added more fuel to the already booming industry and driving buying activity across ASX lithium shares on Thursday.

The post ASX lithium shares are rallying across the board today. Here’s why. appeared first on The Motley Fool Australia.

More reading

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• Which ASX 300 shares are the biggest winners and losers today?

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Tuesday night to discuss the wide-ranging speech by RBA Governor Philip Lowe — covering house prices, interest rates and more — plus a big fall in the Brambles Limited (ASX: BXB) share price and consumer and business confidence in focus.

The post RBA calls a spade a spade. Brambles falls. Confidence in focus. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook (NASDAQ: FB) has made its first move into everyday wearable technology. Last week, the company announced Ray-Ban sunglasses called Ray-Ban Stories that will integrate Facebook technology. 

On the surface, the glasses with cameras, a microphone, and speakers seem aimed directly at Snap’s (NYSE: SNAP) Spectacles, which really pioneered the wearable glasses concept. And given that both companies are interested in augmented reality (AR), they might be moving in the direction of AR. But the reality is that today’s Facebook glasses are more of a competitor to Apple‘s (NASDAQ: AAPL) AirPods, and they show why wearables may be a bigger lift than the tech stock giant would like. 

The Facebook Ray-Bans

The Stories sunglasses made by Ray-Ban will cost $299 and include a number of technology features. Users can: 

• Capture pictures and video.
• Make phone calls.
• Play music.
• Use voice control with Facebook Assistant.

The glasses need to connect to the Facebook View app, which is a separate app specifically for the glasses that can connect to Facebook, Instagram, Messenger, and WhatsApp. 

It’s worth noting that these are not AR glasses as some have been anticipating (including myself). Looking at the features list, I’d say they’re probably more comparable to AirPods integrated into sunglasses than AR glasses. 

Facebook’s biggest problem

The challenge Facebook faces going from a social media software app to a hardware company is that it doesn’t own the core operating system. Whether you’re setting up a virtual reality (VR) headset or a pair of Ray-Ban Stories glasses, you need a smartphone to get started. That makes Apple’s iOS or Alphabet’s (NASDAQ: GOOG) (NASDAQ: GOOGL) Android a key cog in the ecosystem. 

This is most evident when Facebook wants to add features like a voice assistant to glasses. It requires another app to operate (and presumably, the app has to be open). AirPods, on the other hand, work with Siri as soon as they’re connected. 

Facebook is clearly trying to create its own ecosystem in virtual reality, and that could eventually extend to augmented reality glasses. But for now, glasses are dependent on iOS and Android operating systems to function, and that will hamper some of the user experience. 

Facebook is playing the long game

As much as I’m skeptical of this iteration of Facebook glasses, this isn’t the end for Facebook. The company is leveraging what it’s learned in video, audio, and voice from other products like VR headsets and put them into a pair of glasses. I expect the company will continue building on that knowledge and adding technology like AR over the next few years. 

I don’t see Ray-Ban Stories being a big seller for Facebook; it’s more of a starting line for everyday wearables. The big unknowns are whether or not customers want a product like this and if any other big tech companies will join the glasses market. For now, Facebook has a first-mover advantage, and a compelling video and audio product with Ray-Ban. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Travis Hoium owns shares of Apple and Snap Inc. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Facebook. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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