HTC shares plummet after a new report about VR spin-off

HTC shares plummeted today on the Taipei stock exchange, dropping 10%, the maximum allowable in one day.

Investors are worried that HTCis going to spin off its promising virtual reality venture into a standalone company.

Taiwanese media reported today that Cher Wang, one of the cofounders and the current CEO of HTC, has set up a new company that will handle the development of HTC’s VR business. HTCconfirmed the existence of the new entity, saying that its role will be to develop non-descript “new and innovative technology.”

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Wholly owned by Cher Wang, the new company’s legal address is on the eighth floor of HTC’s headquarters in Taipei. Its board of directors includes Cher Wang’s husband and HTCcofounder Cho Ho-tu.

It’s not the first time rumors crop up about an eventual split of VR activities. HTChas strongly denied it has such intentions in the past.

It’s clear that HTCis fully invested in the development of VR, and its executives repeatedly hinted that HTCsees more growth potential in VR than in smartphones. The company recently launched a business incubator called Vive X and pledged $100 million for startups looking to develop virtual reality products. For a company that has been bleeding money for years, $100 million is a hefty investment, one that shows that Vive is not just a mere distraction, like the Re camera turned out to be.

While HTC’s VR prospects are rosy, its smartphone business is anything but promising. That’s despite the good reviews of the HTC10, because let’s be honest, HTCneeds much more than a good flagship to become competitive again. That’s why investors reacted to the VR spin-off rumors by dumping HTCstock.

One other reason is the chilly reception the HTC10 is reportedly facing in China.

Would Vive be better off outside of HTC’s umbrella? Let us know your thoughts.