Unless you’ve been living under a rock, you could not have missed the buzz around meta verse ever since Facebook rebranded itself. And if you are wondering if it is another of those unreal VR experiences, you could not be more wrong. Metaverse is as un(real) as it gets. Turns out, you can not only play games and interact with other digital humans but create a whole new parallel world which its founder Neal Stephenson succinctly visualized.
A space to watch out for
The demand is already there and booming, with a current market valuation of $47 billion and an expansion possibility by a little less than 40% by 2030 (1). That metaverse is much more than buzzed-up hype with people buying virtual lands, authenticating and trading unique products (NFTs), and bridging the gap between physical and virtual worlds (2).
A report by Mckinsey predicted a bullish outlook in five key sub-sectors within the metaverse- socializing, commerce, gaming, fitness, and remote learning. These new opportunities opening a mine of prospects have generated much buzz around metaverse ETFs. Pandemic shocks have induced newer interests in these potential blue-chip stocks as the outlook for the traditional equities is looking quite bearish now.
So, where to park your dollars?
Keynes said that in the long run, we will all be dead, definitely, but not the metaverse. An article in the Motley Fool reasons that despite the metaverse stocks being currently down, this represents the perfect opportunity to speculate on the future of this sector as it becomes the backbone of the Industrial Revolution 4.0. This article lists seven hot metaverse stocks that promise well. It ends by discussing whether now is the right investment time and what to look out for.
- Meta- the tech giant's ambitious plans might take years to fructify, but investors are still betting on Zuckerberg's behemoth. Several PR disasters later, it is still trying to keep its boat afloat in the social messaging space, with its stock down by 46% since last May. The company does not have any significant long and short-term borrowings enabling it to brace for the upcoming headwinds. (3) Some analysts claim it is undervalued and an unfortunate victim of continuous bad publicity.
- Matterport provides a metaverse real estate experience by enabling 3D tours of a location. These virtual tours are themselves hot property. Even though the company isn't doing very well, its business model of virtual property prospecting seems promising in the long run in creating a digital real estate marketplace(4).
- Alpha Desk- Their wall street's projected annualized EPS growth for 2022-27 for this stock is around 30% (5). Not a newcomer in the software industry, it provides advanced design tools to professionals like architects. This Canada-based corporation aims to simplify work through a cloud-based order management system.
- Nvidia is a global semiconductor giant; its market value is $ 745 billion. Moving into the world of fast processing chips and AI, one can expect it to invest in developing end-to-end platforms for its gold standard-setting industry-defining interventions where metaverse would figure prominently (6). They are already making huge profits in big data and video gaming.
- Fastly- a content delivery network (CDN) that promises cloud-based efficient and secure content transmission. Its net expansion rate based on the dollar is 121% in 2021's 4th quarter, indicating that existing customers (whose numbers are multiplying) are spending more. Still, the near-term losses are a dampener, but investors can hope for a better long haul.
- Roblox- millennial? You will vibe with their work. Though a gaming platform (first to be launched on metaverse), they have hosted a concert by artists like Zara Larsson and Tai Verdes (7).
- Unity Technologies- a gaming giant, holds 70% space in that segment hosting one of the two largest video game engines. The firm hopes to leverage its VR expertise to foray into e-commerce and architecture, among others.
It is clear from the list above that metaverse itself is hot property. The newer entrants range from retail businesses like Nike to digital infrastructure firms like Auto Desk and traditional tech cos like Meta and Microsoft.
Should I invest?
In some ways, it is a bet as the metaverse investment remains a sunrise sector. As a nascent sector, it presents unlimited possibilities, and companies across sectors are having a field day to visualize the potential growth areas in this sector (8). The sky is truly the limit for the exponential growth of metaverse enthusiasts.
However, as every investment advice has a cautionary ring, the mere rat race aiming at companies should not be proof enough for longer-term accountability of the utility of metaverse. The legal wrangles over cryptocurrency are far from being resolved, and the recent crash is all but an indicator of an uncertain future. It remains one of the most volatile and speculative investment options available.
Is it for me?
Many of us, especially recently starting on our own, do not have much cash to share. Metaverse penny stocks worth $5 per share are worth considering. Even though they are low-cost, they remain a risky affair. If a serious investor can afford to brace the headwinds for some time and is inclined toward high-risk, high-reward investments, these stocks are a healthy dose of future-proofed long-term options (9).
Those waving the red flags given the recent crypto crash and the general fear of stagflation must remember that many experts had written off digital platforms after the dot-com crash. Notably, most emerging unicorns and decacorns are either tech startups or heavily dependent on AI and other IT solutions for their businesses. So metaverse is here to stay.
The current market blues will not last forever as the industry leaders across the board are betting big on it (10). From a common investor point of view, the current low prices of generic metaverse stocks are the right time to invest as the future may not be all hail and rain for this sector.