If you're a bit confused about what the metaverse is, or will be. You're not alone. In fact as recently as November of 2021, many top tech executives, who have plans for the metaverse, struggled to define the metaverse.
One of the best descriptions I've heard is that the metaverse will be the Web 2.0. It will create the ability for participants to interact in an interactive world that combines virtual reality, augmented reality and video. It will be a world where you can visit digital representations of real homes and purchase digital representations of items in the real world.
However, even that seems too simplistic. The way it's described by Meta Platforms CEO Mark Zuckerberg, it will be a world where your avatar can hang out with distant friends and family in a more realistic, albeit still virtual way. I hope it's not just me, but the whole concept leaves me feeling… disconnected. Which I know is strange because the whole point is connection.
However, many tech companies are pumping money into the metaverse, or at least their idea of it. And institutional investors are taking notice. That combination is almost always an indicator of stocks that are on their way higher.
That's the point of this article; to point you to seven companies that are likely to be significant players in the metaverse. And after a significant correction in the tech sector, it may be the perfect time to buy these stocks at a discount.
Quick Links
- Meta Platforms
- Microsoft
- Snap
- Nvidia
- Roblox
- Unity Software
- Matterport
#1 - Meta Platforms (NASDAQ:META)
You can’t have a list of metaverse stocks without the company that literally changed its name to signal its commitment to the metaverse. Meta Platforms (NASDAQ:FB) is already committing $10 billion into building the metaverse. And you have to believe that’s just a starting point.
It’s not surprising that Meta would be looking to the metaverse. Ever since the company bought Oculus Rift in 2014, they’ve had access to a leading virtual reality (VR) hardware platform that comes with games like Horizon Woods that are a glimpse into what the metaverse may look like.
And did you think it was a coincidence that Facebook wanted everyone to change their profile picture to an avatar? If you did, you may be seeing how the social media giant may be eyeing the next generation of social media.
After the most recent sell-off by a market spooked by the threat of higher interest rates, FB stock is trading 39% than its all-time high set in September. Investors can buy the stock for levels not seen since the summer of 2021. Even if you don’t believe in the metaverse, at this level the stock looks oversold.
About Meta Platforms
Meta Platforms, Inc engages in the development of products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, and wearables worldwide. It operates in two segments, Family of Apps and Reality Labs. The Family of Apps segment offers Facebook, which enables people to share, discuss, discover, and connect with interests; Instagram, a community for sharing photos, videos, and private messages, as well as feed, stories, reels, video, live, and shops; Messenger, a messaging application for people to connect with friends, family, communities, and businesses across platforms and devices through text, audio, and video calls; and WhatsApp, a messaging application that is used by people and businesses to communicate and transact privately.
Read More - Current Price
- $585.25
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 37 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $638.00 (9.0% Upside)
#2 - Microsoft (NASDAQ:MSFT)
If the metaverse was a poker game, then it wouldn’t be a stretch to say Microsoft (NASDAQ:MSFT) is going all in. The multi-faceted technology company is seeing Meta’s $10 billion investment and raising it by almost $60 billion. That’s roughly the amount the company is spending to acquire Activision Blizzard (NASDAQ:ATVI).
The purchase makes sense since Microsoft already has a large, growing footprint in the gaming sector. After the acquisition is complete, the company will own some of the most popular titles such as Call of Duty and Candy Crush Saga. That’s revenue that comes in the door with or without the metaverse.
However, it’s not that much of a leap to suggest that the company may be looking at this acquisition as a way to take a leadership position in the metaverse. To that end, chief executive officer Satya Nadella has spoken about the company investing in what he refers to as the “enterprise metaverse.”
And as tech stocks go, MSFT stock weathered the pandemic relatively unscathed. The stock is down about 11% from its all-time high reached in December and it dropped just 15% from peak to trough, far less than some other tech stocks.
About Microsoft
Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services.
Read More - Current Price
- $436.60
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 26 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $508.46 (16.5% Upside)
#3 - Snap (NYSE:SNAP)
Snap (NYSE:SNAP) stock has climbed nearly 65% since releasing strong fourth-quarter earnings on February 3. However, an earnings report by itself is not enough to drive such a gain in the midst of the downward pressure on tech stocks.
For that, some analysts are suspecting that Snap’s approach to the metaverse is the key; maybe it will be called “metaverse light.” Using its Spectacles augmented reality glasses as the lynchpin, Snap is attempting to tie our physical reality with our digital presence. The plan is to allow real human connections on a social media platform.
It may not be as innovative or as big of a swing as its competitors but in a market that the Bloomberg Institute estimates may be valued at $800 billion by 2024, it may be enough to capture a significant piece of the pie.
Analysts give SNAP stock a price target of $59.81 which would give investors an impressive 47.25% gain.
About Snap
Snap Inc operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight that enable people to communicate visually through short videos and images.
Read More - Current Price
- $11.40
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 22 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $37.10 (225.4% Upside)
#4 - Nvidia (NASDAQ:NVDA)
The metaverse is likely to be a lucrative opportunity for a number of chip stocks. However, even with that said, Nvidia (NASDAQ:NVDA) is likely to stand out.
The company is already one of the leading providers of the type of graphic cards that will be needed in the metaverse. And the company has already created the Omniverse, a metaverse-oriented 3D software platform that has already been downloaded by over 70,000 developers.
NVDA stock suffered one of the largest sell-offs in the tech sector. But that will happen when a stock goes up as fast as Nvidia’s did from in October and November of 2021. In fact, in just those two months, the stock went up as much as it did in the prior twelve months.
But as much as we’re including Nvidia In an article about potential metaverse stocks to buy, it could stand alone as a stock to buy for 2022 period. The company has nearly impeccable fundamentals that include growing free cash flow.
About NVIDIA
NVIDIA Corporation provides graphics and compute and networking solutions in the United States, Taiwan, China, Hong Kong, and internationally. The Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; virtual GPU or vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building and operating metaverse and 3D internet applications.
Read More - Current Price
- $134.70
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 40 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $164.15 (21.9% Upside)
#5 - Roblox (NYSE:RBLX)
We’re delivering these metaverse stock picks to you when the National Football League’s (NFL) Super Bowl is taking center stage. As you watch the game, consider just one opportunity that Roblox (NYSE:RBLX) has in the metaverse.
Roblox just announced a partnership with the NFL to be the developer for the league’s foray into the metaverse with NFL Tycoon. Roblox lets users create and play games. The company generates revenue as users buy in-game currency, called Robux, to acquire items or experiences inside the games. In this game, users will build, play and learn an NFL-centered world. This partnership may answer the question of whether individuals will pay real money for digital goods.
Currently about 66% of Roblox’s 43 million active daily users are under the age 16. This partnership may start to level that out. The NFL will be the latest high-profile company that has partnered with Roblox. Some other names on that list include Nike (NYSE:NKE), Chipotle Mexican Grill (NYSE:CMG), and Gucci.
About Roblox
Roblox Corporation develops and operates an online entertainment platform in the United States and internationally. It offers Roblox Studio, a free toolset that allows developers and creators to build, publish, and operate 3D experiences, and other content; Roblox Client, an application that allows users to explore 3D experience; and Roblox Cloud, which provides services and infrastructure that power the platform.
Read More - Current Price
- $60.11
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 16 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $55.67 (7.4% Downside)
#6 - Unity Software (NYSE:U)
Like Nvidia, Unity Software (NYSE:U) may not be a pure play on the metaverse. However, the company’s software is already used in over 70% of the top 1,000 games. And chances are the games you play on your mobile device, PC or console was made with Unity. Many of these games rely on building 2D and 3D gaming worlds. Therefore, it’s not that big of a leap to see the company playing a significant role in the metaverse.
Unity Software has been hit hard by the tech sell-off. It’s down 21% even after the stock rallied 17% after its strong earnings report. But this is likely to be just a matter of analysts overthinking the narrative. Unity has a nice track record of beating earnings estimates even though the company is not yet profitable. However, on the last earnings call, the company it expects to achieve break even status (non-GAAP) at some point in 2023.
About Unity Software
Unity Software Inc operates a real-time 3D development platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The company offers its solutions directly through its online store and field sales operations in North America, Denmark, Finland, the United Kingdom, Germany, Japan, China, Singapore, and South Korea, as well as indirectly through independent distributors and resellers worldwide.
Read More - Current Price
- $22.51
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $22.21 (1.3% Downside)
#7 - Matterport (NASDAQ:MTTR)
The metaverse will have buildings. And if you buy into the narrative for Matterport (NASDAQ:MTTR), then the 3D spatial data will play a large role in creating “digital twins” of real-life structures.
This isn’t just idle speculation. For starters, Matterport is already being used by Meta Platforms. It has real-world applications and revenue from its partnership with Redfin (NASDAQ:RDFN). And the company has plans to become a subscription service. This makes sense because the company offers a service that is not likely to be repeated by other companies. In fact, Matterport increased subscription revenue by 36% in the last quarter.
However, while the long-term case for MTTR stock looks good, it’s short-term is a different story. The company has already reduced its revenue forecast once. And if the economy slows more dramatically, companies may suspend plans to build a virtual world to shore up things in their real world.
About Matterport
Matterport, Inc, a spatial data company, focuses on digitization and datafication in the United States and internationally. The company offers Matterport Capture Services, a fully managed solution for enterprise subscribers; Matterport Pro3, a 3D camera that scans properties; Matterport Pro2, a 3D camera that captures spaces; LEICA BLK360, a device to create digital twins; Smartphone Capture, a smartphone capture solution for both iOS and Android; and 360 Cameras.
Read More - Current Price
- $4.74
- Consensus Rating
- Hold
- Ratings Breakdown
- 0 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $5.13 (8.1% Upside)
At this time, Microsoft and, perhaps Nvidia, are the only two stocks on this list that I view as being “forever" stocks. That's a critical distinction if you plan on holding any of these stocks for a significant length of time.
That doesn't mean that the other stocks on this list are speculative stocks. If I've presented them accurately, I hope you can see a common thread. Each company has a solid business that can be enhanced by the metaverse,
Right now, Silicon Valley is willing the metaverse into existence. But it's likely to be the companies that are the most in tune with what their users want that will find the most success. It's my belief that these companies have the resources and expertise to curate the metaverse in a way that provides a positive, engaging experience.
And if you hadn't already guessed, if you would rather not dabble in individual stocks, there are ETFs that are focused on the metaverse theme. They aren't as abundant as ETFs that cover the broader tech sector, but the list is growing. One of the most popular is the Roundhill Ball Metaverse ETF (NYSEARCA:META). The fund gives investors exposure to many of the world's largest technology companies. And two of its largest holdings are Nvidia and Roblox.
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