Meta eyes a small stake in Ray-Ban maker. Why Jim Cramer says it's a big deal

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Meta Platforms is reportedly eying a potential stake in the maker of Ray-Ban glasses — a promising development for the social media giant's ambitions in hardware for years to come. The Facebook and Instagram parent is in discussions to take 5% ownership in France-based EssilorLuxottica , the Financial Times and The Wall Street Journal reported Thursday. That stake would be worth a little under $5 billion, the Journal reported, while cautioning a deal may not come together. Meta declined CNBC's request for comment. The companies have partnered on the Ray-Ban Meta smart glasses for years, with the second-generation frames going on sale in October 2023 and by all accounts exceeding expectations. The potential ownership stake in EssilorLuxottica would deepen that relationship and help Meta develop future hardware products. "Taking that stake in EssilorLuxottica [would be] a very big deal," Jim Cramer said Thursday on CNBC, noting how strong demand for the Ray-Ban Meta glasses have been. "You can't make them fast enough," he said. On Meta's first-quarter earnings call in April, CEO Mark Zuckerberg said the glasses were sold out in "many styles and colors," adding: "We're working to make more and release additional styles as quickly as we can." The second-gen Ray-Ban Meta smart glasses incorporate the tech firm's artificial intelligence assistant, MetaAI, which enables wearers to ask questions about their surroundings and get answers. The glasses, which retail for $299, also can take pictures and video, play music and place calls through a phone. Meta in April announced an expanded lineup of frame styles and features, including the ability to share your view on a video call through WhatsApp and Messenger. The second-generation Ray-Ban Meta glasses are thought to be far more successful than their predecessor, which launched in 2021 and reportedly struggled sustain engagement among users due in part to performance issues. "Engagement and retention are also significantly higher than the first version of the glasses," Zuckerberg said in February. Incorporating MetaAI into the product improved the user experience, the CEO said, along with a higher-resolution camera and sharper audio. The third generation of the Ray-Ban Meta frames, which is expected to include a small screen display, is anticipated to be out in time for the 2025 holiday season, the Journal reported Thursday. Meta has not disclosed specific sales figures for the Ray-Ban frames. But, in general, the smart glasses represent a notable win for Meta's Reality Labs division, which develops virtual and augmented reality hardware and software to help advance the company's metaverse ambitions. While Reality Labs has lost tens of billions of dollars in recent years, Meta continues to invest heavily in the segment. "This is the beginning of some of the stuff that Meta is doing. Remember the division that just loses money hand over fist? This is a hand-over-fist production" for Ray-Ban Meta glasses, Jim said Thursday. Shares of Meta Platforms rose more than 2% Thursday, following a five-session slide in which the stock lost over 13%. Those declines coincided with a huge market rotation out of high-flying tech winners and into cyclical stocks that began a week ago. Still, Meta shares are up more than 30% year-to-date. We participated in some Meta profit-taking earlier this month, trimming our position July 8 after the stock had battled its way back from its earnings sell-off in April and set a fresh high. Meta is set to report its second-quarter earnings July 31 when we'll be expecting to hear an update on its long-term AI and metaverse projects. (Jim Cramer's Charitable Trust is long META. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Ray-Ban Meta Smart Glasses 2nd generation at a Meta Platforms event in San Francisco, California, US, on Sept. 18, 2023. David Paul Morris | Bloomberg | Getty Images