The Metaverse seems to be all hyped up now so I’ll start off by saying that if you expect any short-term gains from anything related to Metaverse, it’s all going to be wishful thinking.
Interestingly, the concept of the Metaverse has been around for years. Even something as simple as Secondlife or Habbo Hotel can be considered very early examples of such an initiative. For those new to this idea, read our introduction to Metaverse to learn what it is and how you can invest in it via the Metaverse ETF.
In this article, I’ll share 5 stocks that could be potential winners in the Metaverse space, based on their fundamentals and technicals.
Metaverse Market Map
Previously in her article, Xing Hui made reference to the Metaverse Market Map which is a visual representation of the Metaverse Ecosystem as well as the industries or companies in focus that operate within it.
Here’s a quick summary of what each of these industries focuses on:
| Experience | The software which interacts directly with the Metaverse that we use on a day to day basis |
| Discovery | Channels that we use to find out about experiences. |
| Creator Economy | Software required for the creation of animations, graphics, visuals. Think of it as a more complex “Paint” app. |
| Spatial Computing | Bringing real-world objects into the virtual world. Think of it as a Facebook avatar function. |
| Human Interface | Specific hardware is needed to support the metaverse. Think of headsets, enhanced glasses type of hardware. |
| Infrastructure | Other hardware and networks are required to support the metaverse. Mobile connectivity and semiconductors fall under this category. Hardware required includes computers. |
5 Metaverse Stocks that could take over the new world
In order of preference, these are my top five individual picks. At present, I have positions in FB, CRSR and VUZI and I’m waiting for oversold signals before entering ADBE & MTTR.
1) Meta Platforms Inc. (NASDAQ : FB)
Needless to say, at the center of all of this Metaverse hype is Facebook, which recently renamed itself to Meta Platforms Inc. What I like about this company is that its stock is currently in oversold territory as the business is in the midst of lawsuits and scandal allegations etc. It’s as though everything is hitting Facebook all at once, from whistleblowers coming out to regulators coming down hard on the company.
I personally feel there is no better time to take a small nibble into the company than at this time. I feel perfectly comfortable buying into FB when it is 10-20% off its highs and that’s exactly what I’ve done as shown below:
2) Adobe (NASDAQ : ADBE)
Walk into any production or media house and there’s almost a 99% chance that you’ll find at least one Adobe software integrated in their systems. At the very least, I’m sure you’ll come across Adobe Acrobat Reader (lol).
Despite the endless options of creator platforms out there in the market, Adobe is one of the few which has built its competitive advantage from its network effect. How this works is that once a creator uses one of the Adobe softwares and shares it with others, it encourages other users to collaborate on that creation using the same software it was built on.
While it is now trading at a relatively high PE ratio of 53, I must say that this valuation is indeed justified as the company has grown consistently over the past few years with no signs of slowing down. Furthermore, its SASS model allows its top line revenue to be fairly consistent when it comes to future projections.
At the moment, I still haven’t found an opportune time to make an entry as the company is very much expensive and the opportunities to buy in have been few. But I have this at the top of my watchlist and I recommend that it be on your list too.
3) Corsair Gaming (NASDAQ : CRSR)
Corsair has been a very tricky stock in the past year and although I bought it the day it IPO-ed, this company has been swamped with a heck load of drama due to it being a “meme” stock at one point in time. While it may not be one to lead the way as the Metaverse progresses, I think that the hardware it provides is certainly relevant to supporting the Human Interface element of the Metaverse.
For those familiar with Oculus, you’ll know that it needs to be connected to a computer for its true potential to be unlocked. In this sense, I doubt that the Metaverse reliance on computers will ever go away as it is unlikely that an Oculus headset will ever command the processing power of a gaming rig with its current size.
While the company shines in terms of fundamentals, I believe that the company is currently undervalued as it is sitting at a PE of a mere 15. In terms of technicals, the trend does not look pretty for CRSR in the near term as the company is surely going through a losing streak of lower highs and lower lows. For those seeking an entry, you may want to wait for an entry possibly at the physiological support level of $20 before entering.
4) Matterport (NASDAQ : MTTR)
In the video above, Mark Zuckerberg talks about how your home can eventually be on the Metaverse. It can be a place where you and your friends chill and spend time together, etc. It seems opportune for me to talk about Matterport given how it spiked just 20% on Friday. In fact, Matterport has always been on my watchlist as I personally find its technology exciting.
For those unfamiliar, Matterport is in the area of VR with regard to homes and 3D modelling. When you buy their camera, you can walk around your home while the software constructs your living space in VR for others to “enter”. It’s the perfect technology for the world’s current state, and these days there are countless properties being sold without the buyers ever stepping foot in the property.
Needless to say, I’m watching the price action of MTTR closely as there is a possibility of a cup and handle formation forming and when the market opens on Monday, it’s highly likely we’ll see short-term traders take profit. Should there be no indication of a bearish reversal from there, I would consider it a continuation of the bull run for the company.
5) Vuzix (NASDAQ : VUZI)
You’ve probably heard about Google glass but not its relatively unknown competitor – Vuzix. Founded in 1997, Vuzix is not some new IPO company as they IPO-ed way back in 2009. I must say that this company is quite ahead of itself given how the world just wasn’t ready for such technology until now.
I imagine their next generation of smart glasses will be pretty futuristic and I can’t wait to get my hands on one. Check out the preview of their latest glasses which they released early this year.
The applications for such technology is limitless and I do think that Facebook’s initiative into the Metaverse is exactly what Vuzix needs to bring their company back into the spotlight.
Unfortunately, I missed the boat on Vuzix’s first pump and as you can see below, I kept adding as the stock went down. We’re seeing from the Metaverse news some momentum coming back into the price action so this would seem like a good time for me to add a little more. I’m comfortable holding on to this company and it would seem that ARKK is too.
*WARNING* The Metaverse is still young …. don’t expect any short-term gains
The Metaverse is still very much in its infancy stage. Although Covid-19 is the catalyst for VR, the idea of a perfectly functioning Metaverse is still light years ahead.
As much as I think today is an opportune time to enter, I must warn investors that the plunge into the Metaverse is going to be a long and painful one. As Mark himself mentioned in the video above, their company is presently burning lots of cash to develop this technology. Moreover, in this CNBC video, reporters talk about how we are possibly 15 years away from seeing any significant developments in this concept.
We are nowhere near the level of advancement seen in one of my favourite movies, Ready Player One. In fact, I believe it is unlikely that we will ever see something as advanced as that in our current lifetime.
