The term Metaverse has received lots of attention over the last few months, but what is it exactly? For anyone who read science-fiction books like Ready Player One or watched movies like The Matrix, it is essentially a virtual online environment. Users can live, work and play in it. The possibilities can be endless. More and more companies have begun investing in that space. Below are leading Metaverse stocks to keep an eye on.
Chart by TradingView.
First, let’s talk about our first of the Metaverse stocks. Facebook changed its name to Meta Platforms in October 2021 to show how serious they are about virtual reality.
Back in 2014, they bought Oculus and today their VR headsets outsell all other competitors.
Last year, the company spent $10B on the development of the metaverse. Recent patents on users’ biometric data ensure that the avatars are as realistic as possible.
In August 2021, Meta Platforms took the work-from-home trend to a different level. Thanks to Oculus, they built the Horizon Workrooms application.
Users can participate in work meetings via the app. Everything from a conventional office is available, from the keyboard to the whiteboard.
Meta is currently making the bulk of its revenue from advertisements through its social media platforms (Facebook, Whatsapp, Instagram).
Meta Platforms Inc. (NASDAQ: META)
The probability that those same personalized ads will appear in their VR platform is quite high. On February 3rd, Meta stock plummeted by 25% to $240 due to a loss of monthly active users for the very first time as well as disappointing earnings and guidance for the upcoming year.
Will it bounce back with its investment into the metaverse? Time will tell, but if more people are seeking out VR, right now it can be a good investment opportunity.
Microsoft Corporation (NASDAQ: MSFT)
Microsoft has also been very busy with its metaverse stocks investments. Earlier this year, they bought video game giant Activision Blizzard Inc for a whopping $69B.
Activision is the maker of Call of Duty, World of Warcraft, Guitar Hero, Overwatch, and many other international best-selling video games.
The plan is clear. Integrate video games with virtual reality. The combination with Xbox to bring the best possible video games is only a few months away.
On top of that, Microsoft 365 software suite also offers virtual work environments via Microsoft Dynamics 365 – Connected Spaces, just like Meta does.
Microsoft users won’t have to make the switch to a competitor when it can be integrated into the existing software. The application can also be used on the Meta Oculus VR headset.
Microsoft’s target audience isn’t social media users, but corporations and gamers. Instead of investing in a brand new technology, they are upgrading theirs and buying existing market share. Hence, their stock price did not take as big a hit as Meta’s. They are currently sitting at $307, not too far away from their all-time high of $349.67 set at the end of December 2021.
Roblox Corp (NYSE: RBLX)
Roblox is the closest thing to an online metaverse platform. Hence why they’re in our Metaverse stocks list. The platform partners with outside developers to build games for its users. They recently acquired the platform Guilded, which connects various gaming communities.
Half of its users are below the age of 13, but adults also partake in the experiences. They currently have almost 50M daily active users. That number is constantly growing. Artists such as Tai Verdes and Lil Nas X also hosted virtual concerts during the pandemic.
This can be an opportunity for fans around the world to attend a virtual show of their favorite artists. Some viewers live in areas that performers never visit. Now, they can virtually participate. Roblox also partnered with Forever 21, Nike, and Ralph Lauren to promote their brands on the platform as well as create and sell their merchandise.
Roblox generates revenue by selling its virtual currency to platform users. They can use this currency to participate in various online activities. If Roblox can manage to keep their existing young clients and appeal to the older generations, their growth can be exponential. Their revenues are growing quarterly, but their stock took a hit since its all-time high set in November 2021. They are currently sitting at $63.73, over 50% down from their $141 high.
Unity Software Inc (NYSE: U)
Unity Software’s business model allows them to profit from the metaverse differently. They are the leaders in the 2D and 3D software space. In fact, they are responsible for 71% of the top 1,000 mobile games and more than 50% of games across all platforms use their code. As more metaverse content will be created, Unity will most likely have a big role to play in the visual aspect.
Unity’s platform allows everyday people to create a 2D and 3D world free of charge. If the users like the platform, they can then upgrade to the paid version. Users can then create video games and applications to eventually monetize their efforts. Unity gets a portion of the revenues thanks to their SaaS model (subscription-as-a-service). Thanks to their recent acquisitions, anyone can create movie-grade characters on their platform.
Unity is not yet profitable. But this metaverse stocks list stock is heading in the right direction. Their revenues are increasing while their losses are decreasing. Profitability should be just around the corner for them. Their stock is currently sitting at $108.66, halfway down from their all-time high of $210 set in November 2021.
Chipmakers
Chipmakers like Nvidia Corp (NASDAQ: NVDA) and Qualcomm Inc. (NASDAQ: QCOM) have a unique role to play as technology keeps evolving. Complex calculations on computers require the best chips. These two companies are very well-positioned with their current status to supply the companies mentioned above with much-needed chips. There is currently a worldwide shortage of chips which makes the following years even more important.
Strategic partnerships with aspiring leaders in the metaverse will be essential. Qualcomm signed a collaboration with Microsoft. This ensures a supply of high-end chips and the necessary funding to meet the demand.
Metaverse ETF
Finally, we will talk about a unique ETF. For those who don’t want to invest in a unique company and want broader exposure, Roundhill Ball Metaverse ETF (NYSEMKT: META) is here for you. This ETF comes with a 0.75% expense ratio and has over $800M worth of assets under management. It is the first index to track companies in the metaverse market.
Some of the companies outlined in this article are part of this ETF. Here is the breakdown of the top 10 holdings.
Nvidia Corporation 8.47%
Microsoft Corp 7.46%
Meta Platforms Inc 7.08%
Roblox Corp 5.41%
Unity Software Inc 4.56%
Apple Inc 4.51%
Taiwan Semiconductors 4.49%
Qualcomm Inc 4.10%
Autodesk Inc 3.95%
Amazon Com Inc 3.73%
This ETF gives investors a good opportunity to take a stake in major tech companies. 20% of this ETF is invested outside of the US. It has not been performing very well since its inception. This is still quite a new industry and there is still a lot of room to grow in the upcoming years and decades.
NFTs
Many metaverse stocks companies will take the opportunity to sell NFTs on their platforms. The same technology behind Bitcoin and other cryptos will be used in the metaverse.
More and more people want to own virtual unique property online. NFTs can range from tokens to actual land.
A good example is Decentraland. It is the most popular place to buy land and other items via the MANA cryptocurrency. A fashion show by Adidas recently took place in Decentraland to promote their fashion designs as NFTs. The possibilities are endless with NFTs in a virtual world.
Conclusion
To conclude, metaverse stocks are very diversified. Investors can choose between companies innovating in the actual metaverse, in the graphics, or the hardware behind the technology. This market is very young and has a lot of potential. Companies that can uniquely monetize their brand will come on top.
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