Metaverse stocks are emerging as a form of investing that wagers on the increasing popularity of the virtual, online world. Getting in on the first floor of an investment opportunity can be lucrative. But whether you should invest in metaverse enterprises relies on several criteria, including risk tolerance.
The Metaverse is a mix of technologies that creates a shared virtual reality-based online realm. Numerous experts in technology and finance are optimistic about the growth potential of metaverse companies, which may specialize in gaming platforms, virtual reality products, or back-end technologies, among other areas. Before investing in metaverse stocks, you should learn more about the firms involved, which stock you may choose to purchase, and how to buy metaverse stocks.
"Metaverse" is a popular buzzword, but there's a good reason if you don't understand what it refers to. There is no specific definition of the Metaverse, and there is no consensus regarding its existence.
The Metaverse is a virtual world where users can engage in activities similar to those in the physical world, such as labor, commerce, and social interaction. Some argue that the Metaverse already exists in video games. However, others say that the Metaverse does not yet exist and will combine technologies in a manner that we have not yet witnessed to bring people into virtual worlds. Numerous companies are constructing the Metaverse, but it is unknown what the outcome will be. It might involve firms vying to build the ultimate Metaverse. Or companies are cooperating to create many metaverses in which your avatar can travel from one company's platform to another.
The concept is not new. In his 1992 science fiction novel, Snow Crash, Neal Stephenson is credited with coining the term. Since then, however, individuals' and businesses' conceptions of the Metaverse have continued to grow.
For instance, the business Meta defines the Metaverse as "a collection of virtual locations where you can create and explore with others who are not in the same physical location."
The Metaverse means living in a virtual environment — possibly via an avatar or with virtual reality (VR) goggles that make you feel as though you're somewhere else — where you can form varied groups and engage with others more than on Facebook or Instagram.
What Are Metaverse Stocks?
As the demand for virtual reality experiences increases, some experts expect that the Metaverse will continue developing and becoming an integral part of our daily lives. Metaverse stocks enable investors to acquire a portion of ownership in a metaverse corporation.
No one knows with certainty which metaverse platforms will be successful. Metaverse optimists anticipate that the Metaverse will develop into a fully immersive other reality where people can work, socialize, shop, and spend most of their time.
Facebook changed its name to Meta in 2021 and made Metaverse investing popular by announcing a $10 billion investment to construct its Metaverse. But before Meta, in 2016, the gaming company Roblox unveiled its immersive cyberworld. Roblox was an indispensable metaverse platform by the end of 2021, with about 50 million daily users.
In addition to games and social media platforms, investors in the Metaverse can purchase stock in several directions. Such as metaverse-active software, 3D design, and technology enterprises. Some expect that Unity's immersive 3D game engines will fuel the Metaverse. This makes the software business Unity a popular metaverse investment. Autodesk and Nvidia are two more popular metaverse stocks. The computer and design capabilities used by developers to create 3D worlds, according to experts, might assist in constructing the infrastructure of the Metaverse.
Metaverse naysayers consider the Metaverse to be a fad, gimmick, or fleeting marketing and branding trend. Whether you feel the Metaverse is here to stay, a passing trend will significantly impact your decision to invest in any of these stocks.
How to Invest in the Metaverse
Investors may approach this secular trend from a variety of angles. Consider the following list of probable metaverse levels, which is not exhaustive:
Immersive Hardware
Currently, metaverse hardware consists primarily of virtual reality (VR) headsets. Popular consumer items now combine the senses of sight and sound, but future metaverse hardware products could potentially include touch via haptic devices.
3D Creation Software
The Metaverse requires software solutions for constructing the virtual world's environment and making products that may be traded.
Interactive Platforms
In the same manner that individuals browse websites via the Internet, the Metaverse will require virtual worlds - interactive platforms.
Connectivity
To handle an unlimited number of metaverse players in real-time, the connection will need to be lightning-fast, and the computers will need to render 3D flawlessly.
Semiconductors
Similarly, the Metaverse will have enormous computational power requirements that will necessitate advances in semiconductor technology. The Metaverse will also generate a tremendous amount of data that must be stored.
Security
Once people engage in a more significant number of activities in the Metaverse, their identities and finances will require protection, making cybersecurity a necessity.
Pros and Cons of Metaverse Stocks
As with any other type of stock, you are investing in metaverse equities can be a promising method to gain exposure to an industry or firm with high growth potential. Investing in metaverse equities has disadvantages, such as exposure to risk and time-consuming research and purchasing. Here is what you must know before investing in metaverse stocks.
Pros
Metaverse stocks may be exciting for investors that are interested in emerging technologies. While all stock investments involve risk, and it is impossible to anticipate a stock's future gain or loss, Bloomberg analysts expect that the value of the Metaverse will increase to roughly $800 billion by 2024, up from $477.7 billion in 2020.
You can purchase fractional shares of some significant metaverse equities through a brokerage, allowing you to invest for a bit of sum.
A diverse range of businesses: Numerous corporations interested in the Metaverse, including Amazon and Microsoft, are already recognized as leaders in other technology fields and have a history of executing large-scale, successful tech product development. If your investment budget cannot afford these large corporations, you can invest in less expensive up-and-coming enterprises.
Cons
Investing in any stock includes a high degree of risk, but investing in metaverse equities can be riskier because the Metaverse is still in development. The value of a metaverse company might fluctuate erratically. If you invest a substantial sum in the stock of a single technology company, you risk losing your money.
Investing in individual equities involves extensive research, but investing in cutting-edge, speculative technologies such as the Metaverse and cryptocurrencies demands more effort and investigation. Consider buying shares of diverse metaverse funds as an alternative to researching and selecting individual metaverse stocks. For instance, the Roundhill Ball Metaverse ETF (METV) is a passively managed exchange-traded fund with Nvidia, Roblox, Microsoft, Unity, Amazon, and Autodesk.
Uncertain future laws: Blockchain technology and cryptocurrencies are anticipated to be the basis of the digital economy in the Metaverse. The users would trade digital currencies and assets such as virtual land. Blockchain is a distributed, secure, and auditable ledger that assigns unique values to intangible things using data. Due to the novelty of blockchain technology, the Securities and Exchange Commission is still determining how to regulate blockchain-based assets. Investing in the Metaverse exposes you to a portion of the same risk as to the currencies it is based on, as more regulation could foreseeably reduce investor and user interest.
1. Meta Platforms (NASDAQ: FB)
Meta, formerly known as Facebook, is responsible for bringing the metaverse phenomenon to the attention of investors. The majority of the company's revenue comes from advertisements on Facebook and Instagram apps. However, Facebook's Oculus VR headsets have sold more units than any other product, making Meta a top stock for immersive metaverse gear. The corporation is investing billions in software and content development for augmented reality and virtual reality applications, enabling it to address additional metaverse-related issues.
2. Unity Software (NYSE: U)
Unity is the undisputed market leader in 3D software. The company claims that around fifty percent of all 3D material is created with its software today. As metaverse content is developed, it is realistic to anticipate that a significant proportion will involve Unity in some capacity. It is also practical to think that the company's unique value offer will allow it to continue gaining market share from competitors. Two of its products, Unity Personal and Unity Student, are supplied for free to novice content makers. As these developers achieve success, they will probably become paying Unity users.
3. Nvidia (NVDA)
Nvidia is usually cited as one of the top long-term investments in the semiconductor industry. Unsurprisingly, the company's forays into artificial intelligence (AI) and other fast-processing processors have made it a formidable participant in the world of metaverse stocks.
NVDA's chipsets may already be found in a range of servers and other centralized computers required to perform complex calculations. This includes edge computing platforms operated by companies such as Fastly. Nvidia is almost sure to be a leading beneficiary of the metaverse revolution, given its leadership position and the need to act quickly.
In addition, the impending acquisition of ARM Holdings from SoftBank Group makes its future look even brighter. ARM is a critical player in the patents and software that enable the integration of computer chips. With the acquisition, NVDA will be able to expand its entire ecosystem. In other words, it can integrate its graphics processing unit (GPU) and advanced processors directly into more systems, hence increasing computing capacity. And the Metaverse will require such computer capacity to function.
And while its nearly $40 billion acquisition of ARM is far from certain – with U.K. antitrust officials among the most recent to raise concerns — NVDA is still a possible metaverse winner. After all, its chips continue to set the standard for high-speed computing and calculations.
4. Roblox (RBLX)
The following competitor in the metaverse space is Roblox. Roblox is a technology business that runs a platform for human co-experience. Users may collaborate to create and explore user-generated and 3D environments through the Roblox Platform. The company's mission is to unite the world through play. Some may argue that Roblox is a platform for the future, as it is currently one of the most popular online entertainment platforms for audiences under 18 years old. ROBLOX stock has declined by more than 50 percent since the beginning of the year. Consequently, could it be time to purchase the dip?
Roblox announced crucial metrics for February 2022 last month. Initial estimates place its monthly revenue between $204 million and $207 million. This reflects an increase of 60 to 63 percent compared to the previous year. In addition, its daily active users climbed by 28 percent year-over-year to 55,1 million. Meanwhile, the number of hours spent was 3,8 billion, a 21 percent increase from the previous year's same period. Across the board, these are good data that could thrill investors.
5. Cloudflare (NYSE: NET)
Cloudflare's content delivery network (CDN) is optimized for speed. The business says its network can provide content to 95 percent of the world's population in less than 50 milliseconds. This scale will be helpful as the Metaverse expands. However, as previously mentioned, the Metaverse will have other requirements, which Cloudflare can also meet. For instance, the company already provides cybersecurity solutions that block 76 billion threats per day. It recently introduced a data storage device that may assist in meeting Metaverse's enormous data storage requirements.
6. Autodesk (ADSK)
Autodesk went public in the 1980s and is mainly recognized for its innovative AutoCAD software. Engineers, architects, designers, and scholars can digitally design and create buildings, goods, infrastructure projects, and more in both 2D and 3D with this application. It is industry-standard software, and most construction projects utilize it at some point during its existence.
This software continues to be the company's mainstay, contributing to more than $1 billion in sales during this year's second season alone.
Developers have begun utilizing ADSK's software to design and construct virtual worlds for gaming and entertainment, where the company's prospects get intriguing. The company now provides a suite of technologies for rendering 3D animation, building and launching virtual buildings, and creating within virtual reality (VR) and augmented reality (AR) environments. This segment's (M&E) revenues were up 10 percent year-over-year in the most recent quarter.
Autodesk is a perfect fit and is rapidly becoming the most popular option for developers interested in the Metaverse and its development. Autodesk has continued to shift toward a profitable software-as-a-service (SaaS) business model, with recurring revenues comprising 98 percent of total sales in the most recent quarter. These recurrent revenues have also generated a substantial profit. ADSK's second-quarter free cash flow was $186 million, contributing to a 23.5 percent increase in earnings (the cash remaining after a company has paid its expenses, interest on debt, taxes, and long-term investments to grow its business).
With a lengthy history of 3D design, Autodesk is an excellent option for investors seeking metaverse stocks.
7. Shopify Inc. (SHOP)
Shopify, located in Ottawa, Ontario, is the second-largest e-commerce platform in the United States after Amazon, accounting for 10.3% of total e-commerce retail sales in 2021. Its software suite provides online retailers with payment, analytics, marketing, and fulfillment optimization tools. Shopify has a tremendous chance to impact buyer-vendor relationships in the digital and metaverse worlds as an established industry leader. Retailers may now upload 3D and augmented-reality versions of their products, and Shopify just announced that it would launch a marketplace for nonfungible tokens (NFTs) to be sold and traded. Even though COVID-driven sales growth has slowed, impacting the stock price, the platform boasts an excellent business strategy, world-class technologies, and solid finances. Gross profit for 2021 increased by 61 percent to $2.5 billion, while total sales jumped by 57 percent to $4.6 billion.
8. Electronic Arts Inc. (EA)
Electronic Arts is a video game company founded in May 1982 by former Apple employee Trip Hawkins and headquartered in Redwood City, California. The business developed and published titles such as Battlefield, Need for Speed, The Sims, and the EA Sports series, which includes FIFA, Madden NFL, and NBA Live. Given their established infrastructure and user bases, video game firms may be among the purest metaverse stocks to invest in. Electronic Arts modified its business strategy and shifted its focus from game releases to recurring revenue generated by in-game sales in response to this trend. The number of individual accounts has climbed to 540 million in the past year, while monthly active users have reached 180 million. It is anticipated that EA's net bookings and earnings growth will accelerate during the next two years.
9. Coinbase
Coinbase, the most popular bitcoin exchange, is also one of the largest beneficiaries of the Metaverse. To clarify further, you should realize that crypto-assets serve as the Metaverse's pillars. As one of the world's major cryptocurrency exchanges, Coinbase quickly makes the list of the top Metaverse stocks to purchase in 2022.
Coinbase offers additional crypto-related services, like credit cards, interest accounts, and more, and buying and selling digital assets. And the platform facilitates investments in NFTs through its new marketplace, allowing Coinbase to capitalize on the growth of the Metaverse.
Additionally, Coinbase has revealed that it creates technology that will enable its users to purchase their avatars for Metaverse games.
10. Match Group
As the owner of apps such as Tinder and OkCupid, Match Group may not initially appear to be one of the top Metaverse stocks. Nonetheless, this company has announced its intention to expand its matchmaking efforts into the virtual realm. Match Group intends to integrate avatar-based virtual experiences into its portfolio of mobile applications.
As the first move in this industry, Match Group has previously tested Tinder Coins, its in-app virtual money. These let players purchase in-game features and benefits. In addition, the business has begun designing Single Town, a live virtual world. In this, people will be represented by avatars and can interact with others in virtual environments via an audio link.
Conclusion
The Metaverse is a vast unknown, and hence its potential outcomes are limitless. The increased interest in a virtual world may provide opportunities for businesses that offer everything from mental health improvement products to virtual office experiences.
However, it is vital to have in mind that it will take time and more significant technology advancements before this virtual world is fully accessible and affordable to the general population.
If you wish to gain exposure to this developing concept, examine these 10 top Metaverse stocks to purchase in 2022. Our experts at Top1 Markets can assist you in making a profit.
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