Top 3 Metaverse Stocks To Buy NOW (100X)

Metaverse it's coming but what is the metaverse recently Mark Zuckerberg announced that Facebook will be changing its name to meta platforms or just meta and that the ticker symbol would be changed to mvrs on December 1st he then put out an hour-long video on how he envisions what the metaverse is going to look like and how augmented and virtual reality are going to change the way we experience the Digital World.

The metaverse in his vision is where the physical world would meet the digital world and we're going to talk about exactly what that means in today's video now whether or not you think this will actually happen is one thing but given that 10 000 employees or 20 of fakebook’s workforce is working on AR and VR devices the reality of such is probably going to come true Facebook also seemingly has an unlimited amount of money so Facebook has been estimated to be spending five billion dollars per year on metaverse related development and also acquired oculus back in 2014 for two billion dollars that's a lot of money over the past seven years.

 

Acc to CNBC,

“If Facebook is successful, it will make money from the sale of virtual goods in the metaverse, along with advertising and other virtual experiences.” - Source

 

Here are a couple of stocks I would look into.

1.      Unity Software (U)

2.      Immersion Corporation (IMMR)

3.      Matterport, Inc. (MTTR)

 

Unity Software (U):

 

Unity offers software where developers can create and monetize their games on 20 different platforms including Windows, Android, iOS, PlayStation. In Q2 2021, Unity acquired Metaverse Technologies, a 3D preparation and optimization software. The company is currently generating negative EBITDA margins due to large expenditures on R&D.

 

Immersion Corporation (IMMR):

 

Immersion is a leader in haptic technology. The company has deals with Sony, Asus, Texas Instruments, Stanley Automotive Products, and Peloton. Immersion currently has $107.3 million in cash and cash equivalents. The Metaverse could be the next opportunity that sparks Immersion to break out the piggy bank.

 

Matterport, Inc. (MTTR):

 

Matterport is a leading spatial company that digitizes the real world. Their current business revolves around capturing real estate with cameras, digitizing the data, and turning that data into 3D models. Matterport could be one of the biggest players in the Metaverse space within 10 years. Matterport's revenue grew 21% YoY in Q2 2021 with subscription revenue growing 53%. Currently, Matterport is not profitable, mainly due to its major investments in sales, marketing, and R&D. I believe this will not be a major issue over time as their customer acquisition has been astonishing.

             For more Detailed Version go check out this article.

 

I personally, do think that some version of the metaverse will eventually come into existence it's not a matter of if just more of a matter of when while the metaverse in general is not owned by Facebook clearly mark is trying to stake claim of it by changing the company's name to meta so today we'll go into detail on what the metaverse actually is what it'll look like and we'll also cover how to get in early into different etfs and stocks that could play a big role in the eventual metaverse.

 

What exactly is the metaverse I’ll try to explain it in the simplest way that I can with visuals the metaverse can be best described as the next major iteration of the internet just like how the mobile internet was built upon the traditional internet from the 90s and early 2000s it's basically a world of endless interconnected virtual worlds where people can work socialize and play using VR augmented reality and other devices.

 

“Nike is Looking to the Metaverse with New Hires and Virtual-Focused Trademarks.” - Source

 

There are a few main features of the metaverse that we should call out number one there will be no limits or lengths the metaverse will never be off it'll never be down for maintenance updates or server restarts people will be able to log in or out whenever they desire without ever having to load or save their data everyone will experience the metaverse at the same time and live synchronously.

 

The closest analogy i have for you is that back in 2019 Fortnite held an in-game concert where if you logged in at the time you could go see the DJ marshmallow play a virtual set the entire game everyone that was playing at that time could be sharing that same experience.

 Now if you happen to be on a voice chat with your friends at the time it's like you were all experiencing a marshmallow concert together the metaverse aims to be something similar to that where everything takes place in one instance and millions of people will be able to interact with each other in a digital slash physical world. 

The second major feature is that there will be an economy so with so many people spending time in this Digital AR and VR  world both businesses and individuals will be able to sell goods and services within the metaverse think of your favorite brand selling digital goods within the metaverse like for example Louis Vuitton might be selling a digital bag that your digital avatar can hold.

 

 

I’m sure users will also be able to create their own small businesses too within the metaverse so for example a popular business started in almost every type of online multiplayer game is usually a user ran casino so in this way attention is being monetized and the more attention that goes into the metaverse the more opportunities for transactions are going to happen.

 The third feature is that there's going to be unlimited potential for user created content so while there will certainly be corporations and businesses creating experiences and content within the metaverse individual users will have a large influence over



The majority of the metaverse's content a user-created content model also allows the metaverse to be highly scalable and always be relevant to the latest trends in addition to user-created content many companies such as Nike and Microsoft have already jumped aboard the growing hype surrounding the metaverse.

 In late October Nike filed seven trademarks with the u.s patent office for basically downloadable virtual goods retail store services featuring virtual goods non-downloadable virtual footwear etc.



So we can already see some institutional adoption from companies for digital goods within the metaverse and that actually brings me to my next point number four which is everything will be compatible and span both the digital and physical environments so augmented reality and virtual reality are going to be crucial parts of the metaverse.

 Now what comes to mind right now is amazon's AR view with amazon's AR view customers can preview products in their home virtually before they complete their purchase this concept isn't so foreign to us right now

 but it could be very well present in the metaverse another interesting application is that in the metaverse goods will be tradable with other goods using the same platform regardless of community or branding.


For example imagine a universe where you could trade something like a valuable fortnight skin for something that goes in your digital home maybe like a digital couch basically all barriers are going to be brought down and that's what the metaverse is about all right so now that you know a little bit about the metaverse how can we invest in the metaverse especially now 

because it is still quite early the metaverse is probably still a few years away but there are going to be companies and stocks that are going to be vital to its growth first let's talk about the market opportunity now according to Bloomberg intelligence the global metaverse market could reach 800 billion dollars by 2024.

Now you can also add on the opportunity of metaverse infrastructure in the market opportunity so firms such as round hill investments project a 2.5 trillion opportunity by 2030 if you add all those together to give you some context here the entire energy category has a market cap of 2.95 trillion dollars and the entire real estate market is worth about 1.8 trillion dollars whether or not the metaverse actually grows to that big of a size time will actually tell we're not too sure there are two main ways of investing into the metaverse.

For now number one you could invest in the content creation side or the infrastructure side of the metaverse is number two if you're looking for an easy all-encompassing investment into the metaverse you could just buy an etf so I know that round hill investments offers an etf called the meta etf which is designed to offer you exposure to companies that are actively involved in the metaverse. 

Now in terms of the typical companies that the etf is buying into some include infrastructure companies.



For example Cloudflare and NVidia or gaming engines for virtual worlds such as unity and Roblox so if you're bullish on just the metaverse in general you could look into the meta etf their expense ratio however is quite high at 0.75 percent since this etf launched just this year in June.

We are actually not too sure of how it's going to be doing in terms of performance quite yet if you would like to invest in this space though another easy alternative you have is just to look at what the meta etf invests into and pick and choose selective stocks that could fit into your overall investment thesis and portfolio so let's actually go through two stocks that i think that are worth highlighting that you could look into for the metaverse.

The first company I want to talk about is Matterport. So, mataport is a leading spatial company that digitizes the real world their current business revolves around capturing real estate with cameras digitizing the data and then turning those data into 3d models realtors can then use these models and showcase them to clients without ever having to step into a home one of the biggest challenges that the metaverse is going to have is the need to digitize and import every physical aspect of the real world into a virtual environment.


So, that's where matterport comes in it could be one of the biggest players in the metaverse space within 10 years as it currently dominates the growing market for the 3d digital transformation of the physical world to the digital world so unless a competitor just comes along and does it better i don't see matterport being matter less as in it won't matter anymore okay dumb joke matterport already has a portfolio of 38 patents and 28 pending patents so any new competitors will have a very hard time entering the industry.



Matterport currently generates 52 percent of their revenue through sas or subscription as a service and a strong component of Matterport is its diversified customer base with less than 10 of their total revenue derived from the top customers and 330 000 customers across all verticals Matterport’s revenue is not heavily weighted by any specific customer Matterport currently has deals with companies like redfin century 21 Airbnb, Hyatt nationwide, Autodesk and the list goes on

Now one cool note of the recent earnings call on November 3rd was that Matterport actually does indeed have a partnership with Facebook aka meta and Matterport is partnering with meta ai research to develop ai systems for the physical and digital world.

 Now the story of my report becomes a little bit shaky when looking at their valuation with a 52 price to sales ratio and a market cap of 4.9 billion dollars Matterport is already an extremely highly valued company the 4.9 billion dollar market cap compared to its trailing 12-month revenue of 105 million dollars is a lot of valuation for a little bit of earnings.


Now according to one of their investor calls there is a projected 240 billion dollar adjustable market and they believe that they've only penetrated about four percent or a little bit less than four percent penetration.

Now in terms of their earnings call which I did mention a little bit earlier Matterport actually had slight misses on their eps and their revenue now as a result of those earnings they actually did start trading down after hours about six percent so even though they had bad earnings if you are bullish on Matterport for the long term that could actually be a buying opportunity.



The next dock you could look into is unity so unity offers software where developers can create and monetize their games on 20 different platforms including windows android iOS PlayStation and more

Approximately 60 of AR and VR games are currently created on the unity platform while the majority of their revenue comes from the gaming industry unity is looking to expand into other industries in the second quarter of 2021.

Unity acquired metaverse technologies which is a 3d optimization software company the acquisition means that professional creators can actually more easily and quickly import 3d data into unity and optimize the models for real-time development now unity has some valuation and profitability concerns currently unity generates revenue like crazy. 

Basically increasing year over year up and to the right as this graph shows us their gross margins remain high at around 80 but their net and operating margins are in the red because of r d costs.

Basically, they're spending a lot of money on investing in themselves which is probably a good thing but in the short term their metrics may look poor while they might not make a profit for some time unity has a cash cushion of around 1.6 billion dollars that they can use to cover the losses in the meantime now regarding the valuation the stock currently reflects high growth expectations with a price to sales of 39 enterprise value to sales of 44 and a price to book of 21.3

It's currently trading a little bit at a high premium when compared to other companies in its space now unity has a growing revenue at a compounded annual growth rate of around 142 percent over the past three years but analysts actually expect that to be closer to 29.3 for the next 10 years with those growth rates the current valuation might actually be deserved the average analyst price target is currently between 116 to 130 dollars per share.

The Bottom Line

The bottom line for unity is that the stock is not cheap but its high revenue growth rate plus a large army of monthly active users on all types of unity applications is around 2.7 billion monthly active users so that's a lot of users and their continued momentum and other types of industries could actually justify that higher valuation so both of these companies’ unity and Matterport should have some sort of impact on the metaverse