3 Metaverse Stocks to Buy Now

Neal Stephenson coined the term ‘metaverse’ in his novel Snowfall three decades ago, but it has become a buzzword again in the past year as virtual reality, augmented reality and digital asset platforms have blurred and blurred the barriers between the physical world and the digital world.

According to Report Ocean, this global metaverse market could grow at a compound annual growth rate (CAGR) of 39.1% between 2022 and 2030. However, there is a lot of hype and noise in this booming market, and it can be difficult for investors to separate the losers from the potential winners.

Image source: Getty Images.

Today I’m going to take a look at three promising stocks from the metaverse – Metaplatforms (FB 3.86%Unity software (YOU 11.43%and Roblox (RBLX 15.36% — and explain why they can still make attractive investments for high-growth technology stocks in this challenging environment.

1. Meta-platforms

Last October, Facebook rebranded itself as Meta Platforms to show its long-term focus on the metaverse market. This strategy is rooted in the Reality Labs segment, which generated $2.3 billion in revenue in 2021, primarily from sales of VR headsets, VR software, and smart glasses.

The Reality Labs segment accounted for just 2% of Meta’s revenue and posted $10.2 billion in operating losses last year, but it has steadily increased. Meta will reportedly ship about 10 million Quest 2 headsets by 2021, and the Horizon Worlds VR playground reached 300,000 users earlier this year. It also accounts for nearly 50% of all virtual asset sales on this platform.

Meta’s metaverse activity is still small compared to the 3.64 billion people who access at least one of its apps (Facebook, Messenger, Instagram and WhatsApp) every month. It will also likely continue to cost money as Meta focuses on selling cheap headsets to attract more users.

But in the long run, Horizon Worlds can continue to grow as Meta releases more devices and metaverse experiences. This transformation could reduce the company’s reliance on targeted advertising.

Meta’s stock has already lost about a third of its value this year and is trading at just 16 times future earnings. This low valuation reflects the near-term challenges to its advertising business, but investors confident in their view of the metaverse should consider hoarding stocks today.

2. Unity software

Shares of Unity Software have halved this year as investors pull out of more expensive growth stocks. The stock may still look a bit pricey at 14x this year’s sales, but I think Unity is a solid metaverse buy for three reasons.

First, Unity’s game engine powers more than half of all mobile, console and PC games in the world. Developers use Unity because it bundles several tools for creating images, sound effects, in-app ads, and multiplayer functions in one easy-to-use package. Games created with Unity can also run on multiple game platforms without having to be rewritten.

Popular VR games including Meta beat the saber, which is already running on Unity. Therefore, Unity should capitalize on the long-term growth of the traditional games market and the expansion of the metaverse games market.

Second, Unity has a clear vision for the future. It expects annual revenue growth of more than 30% “over the long term” and break even on a non-generally accepted accounting principle (non-GAAP) by 2023.

Finally, the company plans to develop its ecosystem outside of the gaming market. Already being used to develop non-game 3D graphics for virtual reality education and training, self-driving applications and industrial automation technologies, it recently entered the theater special effects market by acquiring Weta Digital from Peter Jackson. (who produced the special film). effects for under the spell of the ring and The Iron Throne) last Dec.

All of these strengths arguably justify Unity’s higher valuation and make it a solid long-term investment in the growing metaverse market.

3.Roblox

Roblox has become a household name during the pandemic as millions of incarcerated children have built, shared and made money with simple games on its platform. Its popularity skyrocketed because the block-based system was easy to use, required no coding knowledge, and was a creator-oriented platform like AlphabetYouTube’s that didn’t rely on professional developers.

Roblox’s growth slowed in a post-lockdown market as more children returned to school, but it still finished in 2021 with 49.5 million daily active users (DAUs), a 33% growth compared to a year ago. It also continues to gain older users (over 13) and expand abroad.

The popularity of Roblox has made it a fertile platform for major brands such as Nikebarrieris Gucci, and sony Music to sow their own metaverse seeds. Nike built a virtual showroom called Nikeland, Gucci launched “Gucci Garden” themed rooms to showcase its products, and Sony Music launched metaverse concerts for its artists. If other brands follow suit, Roblox’s platform could evolve into a virtual shopping mall where users can spend their Robux-in-game currency.

Shares of Roblox have lost about two-thirds of its value this year as investors worry about slowing growth and mounting losses. But after that slump, only seven times as many are being sold this year. If Roblox stabilizes its business and continues to gain more DAUs and brand partners, its stock could recover and become a top game metaverse again.

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