Updated: Nov 14, 2022
I remember sitting in my 7th grade computer class in 2005 learning how to type on what seems like an ancient version of the Apple PC. While it wasn't the original, it still looked like a dinosaur in comparison to the sleek laptops people can now slip into their bags. As an extension, the cellphone has developed so it acts as a mini computer and an extension of a person's social life - a virtual life that is.
Now come 2021 and people are now talking about a Metaverse - a virtual world like those shown in a sci-fi movie. However, it's not just a far flung hope - there has already been some progress made the past few years and the future seems like it is shaping up towards this direction. Can you imagine someone even from 20 years ago looking into the present world now? I would think it is unrecognizable. And with the internet established and technology developing at an accelerated speed, it will be interesting to see how the world will look in 5, 10, and 15 years.
Top IT companies in the world are already working on this virtual world and have come up with a premature version, with functions that would have been highly useful during a Pandemic when there were so many restrictions with traveling and meeting people. While companies like Zoom leaped during the Pandemic, imagine a world where everyone can sit around a virtual 3D conference room and interact with one another, unlike the constraints of a 2D video call. Not to mention, these online calls, while convenient, aren't as appealing with lags and disconnections that interrupt the flow of a meeting of conversation.
However, the Metaverse is much more than 3D Zoom calls - I like how USA Today put it:
It's a combination of multiple elements of technology, including virtual reality, augmented reality and video where users "live" within a digital universe. Supporters of the metaverse envision its users working, playing and staying connected with friends through everything from concerts and conferences to virtual trips around the world.
Some may claim it's about time for a new evolution of the internet and that we are in the very cusp of the next internet. Mark Zuckerberg, who is highly bullish about this Metaverse (and has even charged his company Facebook’s name to Meta), believes key features of the Metaverse will become mainstream in the next 5 to 10 years.
In the meantime, for those who believe in the future of technology and that the world is going to look a lot more virtual and online, a Metaverse is a possibility. One can say that while it's still early, it may be a good time to start investing. So where to start? Let me begin with one ETF that encompasses it all and then 3 individual stocks positioned to make large gains with the Metaverse.
If you want a piece of the pie but don't want the pain of researching all the individual stocks, there is a comprehensive ETF that covers the top players for the Metaverse, appropriately called the Metaverse ETF or ticker symbol META.
Currently trading at ~USD $16 to $17, it is a newly created ETF on June 30, 2021 so there is no historical data to go off of. That being said, you can track the performance of the underlying holdings, which consist of the following stocks shown on the left. You can see that there some big names in there, such as Nvidia, Microsoft, Meta (formerly known as Facebook), and Amazon, which may already be part of your portfolio if you have interest in Index Fund ETFs such as the S&P 500 or NASDAQ 100.
For individual stock picks, we will be focusing on "smaller" companies compared to the ones I just mentioned in order to have exposure to potential exponential growth if Metaverse really kicks off.
Keep in mind that all of the stocks mentioned are not generating positive earnings and they had just went public in 2020 or 2021). These companies are also heavily re-investing back into the company and spending significant amounts on R&D. That being said, all the following companies have shown to produce increasing sales as well as adoption of their services by the mainstream. Today, we will just be discussing what each company does and what the potential holds. Feel free to dig further and conduct your own research of the companies before investing.
Roblox Corp (RBIX)
Currently trading at ~USD$135 and went public this year in 2021. U.S. News summarized the company as doing the following:
Roblox is an online entertainment platform that may be the closest thing to an existing social metaverse today. Roblox is essentially a video game that has 43.2 million daily active users, its own digital currency and a wide range of unique virtual experiences, such as a live digital concert by Lil Nas X in 2020. Outside developers are constantly building new games and content to integrate into the existing game, which serves as the base for the growing metaverse. The platform's 1.3 million developers are on track to collectively earn $500 million from their creations in 2021.
Unity Software Inc. (U)
Currently trading at ~USD$190 and went public in 2020. U.S. News summarized the company as doing the following:
Unity Software owns one of the two main 3D video game engines, which allows designers to customize how video game players move and interact within their games. In fact, 94 of the largest 100 game development studios use the Unity engine. On Unity's second-quarter earnings call, CEO John Riccitiello said the company will "support and shape the metaverse" and will "emphasize content creation, cross-platform access, and narrowing the distance and reducing the friction between creators and consumers." Unity may be a central player in helping businesses build unique metaverse presences – the equivalent of websites or social media pages today.
Matterport Inc. (MTTR)
Currently trading at ~USD$28 and went public this year (2021).
This company is uniquely not in the game space but is changing the way we look at real estate. Matterport described their business as the following:
Matterport, Inc. (Nasdaq: MTTR) is leading the digital transformation of the built world. Our groundbreaking spatial computing platform turns buildings into data making every space more valuable and accessible. Millions of buildings in more than 150 countries have been transformed into immersive Matterport digital twins to improve every part of the building lifecycle from planning, construction, and operations to documentation, appraisal and marketing.
Another interesting take on what the company was doing was also described by The Motely Fool:
Matterport is helping create this "doppelganger universe" by enabling businesses to digitally capture a 3D image of their spaces and put it on the cloud. Quite literally, Matterport is helping businesses create digital twin spaces. Matterport customers can easily map their space with their phones and upload their space to the cloud.
This process allows customers to have insight into their spaces. Customers like real estate company Redfin can map and upload 3D images of listings. Matterport allows retail customers to walk through stores digitally and buy clothes on the spot. This ability to capture a virtual space and upload it now allows the real world to be mapped virtually, creating endless opportunities.
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