The Occulus VR acquisition looks like Facebook hedging its bets with the future of consumer computing UX. Better $2 billion and, say, $200 million a year for ten years today than $19 billion tomorrow. Or so it seems he is thinking.
Still, I like to check the math. Occulus VR says it has sold 75 000 "development kits" [1]. It has been 1 year and 7 months since August 2012 [2], when Occulus VR began selling its development kits. Let's assume a 200% YoY 2013 growth rate - that means 56 000 kits were sold in 2013. Let's say these keep selling at the $350 the Developer Kit 2 goes for [3]. That's $20 million in 2013 revenues. Let's turn that into $2 million of profits - a 10% margin.
Let's value Occulus VR as if it were a growing perpetuity. If Facebook had a cost of capital of {10%, 20%, 30%}, Occulus VR free cash flow (FCF) would have to grow at least {10%, 20%, 30%} a year. Otherwise, its $2 billion price tag would not make sense.
Companies are not immortal. Let's value Occulus VR as a 20-year growing annuity. Setting Facebook's cost of capital at {10%, 20%, 30%}, Occulus VR's FCF would have to grow at least {45%, 58%, 71%} a year.
Not a bad deal.
[1] http://www.oculusvr.com/blog/oculus-joins-facebook/