Investing in Metaverse Stocks: Everything You Need to Know in 2022

After Facebook renamed itself Meta Platforms, no one is lazy enough to talk about metaverses. Even though the field has been developing for years, a combination of factors such as a pandemic, technological base development, support from major players, and interest from celebrities can give this industry a boost.

Which companies might be the most attractive for investment thanks to the development of metaverse?

What is Metaverse?

Even though the general public began talking about metaverses after Facebook rebranded last year, the term metaverse was first used by science fiction writer Neal Stephenson 30 years ago in the cyberpunk novel Avalanche to depict a virtual space for people to interact through their avatars. Nevertheless, any online game matches this description, and a 21st-century metaverse must meet a set of criteria:

• the metaverse is not synonymous with VR or AR (VR/AR can only be a medium);
• it should cover different spheres of life (not only games but also work, study, communication);
• it must have a full-fledged economy;
• "unprecedented interoperability" - the ability to move your "stuff" from one place in the universe to another;
• decentralized management of multiple players, no single owner.

We are almost on the verge of a metaverse: exchanging bitcoins, playing multiplayer games in real-time, acquiring art in the NFT. Some elements of it can be found in multiplayer games, for example. In the shooter, Fortnite now comes not only to play but also to listen to a concert by Ariana Grande. Players accumulate virtual currency, which can be used to unlock equipment and other things to customize their avatars. Nvidia has launched the Omniverse platform, which allows you to collaborate in 3D space in real-time. And in the blockchain game Axie Infinity, you can earn real money by selling game creatures. Back in August 2021, it became the first NFT project on the Ethereum network, with a total trading volume crossing the $1 billion mark. Several million people play it every day.

The real (meaning existing technically, not only in books and movies) forerunner of the metaverse can be called Second Life, a three-dimensional virtual world combined with a social network. This is not a computer game, but a virtual space in which you can create your own stories: make friends, fight, organize your territories, and equip them as you wish.

During the lockdown, it was especially relevant to be able to meet with other people, not on a "physical" level, which was not available for obvious reasons. Negotiations and meetings in Zoom or Skype did not suit everyone: there is a well-known story when a company of British illustrators used the game Red Dead Redemption 2 for meetings during the lockdown. The prairies of the wild west and sitting around a campfire are much better than a normal Zoom picture.

The metaverse essentially needs to exist not in parallel with the real one, but within it, to be fully integrated into everyday life. They should become a single, complementary and compatible digital space.

Now with the help of augmented and virtual reality devices, it is possible to get an idea of what the meta world is all about. But the real process of forming shared cyberspace can begin when the corporations working on this idea now make their products compatible with each other. In a shared space, people will communicate and use digital objects (e.g. sell or buy them) regardless of where they were created. The meta world should penetrate our lives as an additional dimension, as a "digital layer.

Meta Platforms

Meta laid the groundwork for the metaverse vision back in 2014, when the company acquired VR startup Oculus. FB has had a tough time with the division in terms of its social media operations. But perhaps Zuckerberg will have the last laugh.

In August, Meta launched a public version of a new Oculus app called Horizon Workrooms. Using VR headsets, users can participate in meetings with avatars. They can see their computer screens, and keyboards and even participate in virtual whiteboards.

"In the future, collaboration will be one of the main ways people use the metaverse," Zuckerberg wrote. And Meta appears to be one of the first to bring such tools to market.

Given the recent surge in work-at-home organizing because of COVID-19, this could certainly be a major win for Meta in the near term

Meta is already a set of communities through a variety of apps and communication platforms, so the metaverse makes a lot of sense for the company.

Given Meta's leadership position in hardware and its current status as a pioneer in work-focused applications, Meta could achieve this sooner than others.

Even better, Meta represents a safe play for the growth of the metaverse. There's no denying the firm's profitability or cash flow generation. It may reassure conservative investors when they pay attention to this topic.

How the experiment with the metaverse will turn out is unknown, but the company obviously has the money for it: the business model is stable and consistently profitable. Analysts believe that the company needs to invest in new areas for the sake of long-term development, including the metaverse. Among the risks, they note a decline in the profitability of the business more than is expected now, as well as uncertainty with monetization.

Investments in the metaverse should improve the company's long-term growth prospects. The metaverse has a real chance of becoming a mass-market service, thanks to the millions of Oculus Rift glasses already sold.

Boeing

Boeing intends to regain its dominance in the aviation market and is ready to spend $15 billion on this in the next decade. As part of a plan to bring these intentions to life, the manufacturer of aircraft, space, and military equipment announced that its next airliner will be built in the metaverse.

According to Reuters, the company said it is focused on creating an industrial system of the future. As part of it, it will design, manufacture and maintain aircraft in a single digital environment. At the factory of the future, Boeing 3D aircraft designs will be implemented by specialists and robots from around the world. People will be in contact with each other thanks to HoloLens mixed reality glasses. The manufacturer expects its plans to come to fruition in two years.

Critics do not give much credence to the ambitious plans announced by Boeing. They note that the company has made loud promises of a digital revolution before.

Alibaba

Alibaba has created a new company in Beijing, Yuanjing Shengsheng, to test the gaming potential of the metaverse. This was reported by the South China Morning Post. The new unit with registered capital of 10 million yuan ($1.6 million) has specified software development and services in this area as its core business.

The creation of Yuanjing Shengsheng indicates that Alibaba, like other Chinese technology majors, is interested in the idea of creating a metaverse in which people can interact with each other and digital objects. The company said the platform would offer the free computing power to small and medium-sized cloud game developers.

Matterport

Shares of Matterport, that year's Nasdaq newcomer, rose on Oct. 28, the day Facebook announced the Metaworld, and jumped 18% the next day.

Since Matterport went public on Feb. 2, 2021, the startup's stock has risen more than 120%.

Matterport's platform allows you to create 3D replicas of buildings and spaces of all types and purposes, from restaurants and hotels to offices and factories.

The company also has a free mobile app on the Google Play store that allows more than a billion Android users to capture three-dimensional spaces with their phones in their pockets.

As of Sept. 30, Matterport had 439,000 subscribers in 170 countries (up 116% from the same period last year), with 54,000 of those subscribers paid (up 35%).

The company's third-quarter revenue rose 10% to $27.7 million, most of which came from subscription revenue - $16 million. (up 36%).

Todd Gordon, the founder of the financial advisory firm Inside Edge Capital Management, commented on the company's advantages, "Matterport has a big first-mover advantage. They have nearly 6 million digitized scans of buildings and infrastructure, which is 100 times more than the nearest competitor."

Matterport's margins will be good; the company's business model is based on scalable subscriptions. Half of its revenue this year comes from iOS subscriptions and the Galaxy app. Management says that by 2025, 80 percent of revenue will come from subscriptions.

Matterport is projected to generate $118.4 million in revenue this year, and that figure is expected to grow by nearly 56% in 2022.

Nvidia

Experts single out Nvidia as the best beneficiary of future metaverse development.

As we know, analysts like Nvidia for many reasons. The metaverse is another reason. In fact, Nvidia can be the next trillion-dollar company after Tesla.

Nvidia's market capitalization today is about $603 billion, with shares up 103.74% since the start of 2021, far exceeding the overall market growth and the 28% gain of the industry's SMH Semiconductor ETF exchange-traded fund.

Infrastructure is the key to the metaverse. Many companies will build it, but most of the revenue will come from infrastructure companies, and that's where Nvidia comes in because it's already a leader in artificial intelligence and the semiconductor industry. The power of its chips is the key to the metaverse.

Roblox

Roblox is, of course, times smaller than Meta, but has spent years developing its metaverse platform, and in its latest report on Sept. 15, it claimed 48.2 million daily active users, a 32% increase over last year.

At first glance, RBLX is a video game. The company has 43.2 million active users per day, who logged 9.7 billion hours.

The thing is, it's not a standalone game. Roblox uses third-party developers to create various games, content, and other entertainment for its users. The firm makes money by selling its virtual currency, which players can use to access these games, experiences, and content.

Roblox has already set the stage for a metaverse in its game. And it continues to expand.

RBLX is spending a lot of money on talent and acquisitions to create its own version of the metaverse. Recently, RBLX bought Guilded, a platform designed to connect different gaming communities.

In the last quarter, the company had a 126% increase in sales compared to the same period last year. This follows a 140% year-over-year increase in revenue.

Given its leadership position in the foundations of the new wave of technology, this metaverse stock could be a powerful choice for portfolios.

Fastly

Fastly operates a peripheral computing infrastructure-as-a-service platform that provides servers and other equipment as a source of data creation.

The Fastly platform can move 145 terabytes per second of data to 28 countries.

Revenue growth at Fastly has been meteoric since its launch about a decade ago, with revenue up 14% in the most recent quarter compared to the same period last year

Implementing a metaverse will require a lot of peripheral computing solutions. When you think about the enormous amount of data transfer needed to create a real-time virtual world that users can interact with, without peripheral computing and companies like Fastly, these kinds of transactions simply can't work.

In addition to the promise of the metaverse, FSLY also plays an interesting role in the ongoing expansion of cloud computing. And with the recent stock decline caused by the tech crash, Fastly is cheaper than it has been in a long time.

Autodesk

Autodesk is best known for its AutoCAD software.

This application allows engineers, architects, designers, and scientists to virtually design and create buildings, products, infrastructure projects, and more in both 2D and 3D. And it helped the company realize more than $1 billion in sales in the second quarter of this year alone.

Developers use their software to design and create virtual worlds for games and entertainment.

The firm now offers a suite of products designed to render 3D animation, build and run virtual buildings, and create virtual and augmented reality spaces.

Revenue from this segment grew 10% year over year in the most recent quarter.

Autodesk is a perfect fit and is quickly becoming the top choice for developers interested in the metaverse and building it. The company's recurring revenues accounted for 98% of total sales in the most recent quarter. Profits were up 23.5% in the second quarter, with ADSK generating a free cash flow of $186 million.

With a long history in 3D design, Autodesk is a top choice for investors considering metaverse stocks.

Shopify

Shopify has made two big moves this year that have to do with the potential for trading in the metaverse. One is the acquisition of the AR app Primer.

This is where users can see the implications of purchase or project in their space. For the metaverse, this gives Shopify a powerful tool that subscribers can use to create potential stores or purchases in the digital world.

Also, Shopify has launched a new NFT platform that will allow digital creators to sell art and other content directly to consumers.

As these future aspirations are realized, SHOP is still doing what it does best -- developing e-commerce solutions for businesses. And as a leading provider of such software and applications, the stock of this metaverse provides ample security.

Microsoft

Last year at the Ignite conference, Microsoft CEO Satya Nadella announced that the company was creating an "enterprise metaverse" through Azure cloud services. Later on, Microsoft unveiled its vision for the metaverse.

As the physical and virtual worlds converge, the metaverse, consisting of digital twins, simulated environments, and mixed reality, becomes a first-class platform. With the metaverse, the entire world becomes a canvas for your applications.

With Azure Digital Twins, you can simulate any object, and place with Azure IoT, and maintain and synchronize a digital twin. Synapse tracks the history of digital twins and predicts their future state, and with Azure, you can create autonomous systems that are constantly learning and improving.

The Power Platform allows domain developers to extend information about digital twins and interact with the data through low-code and no-code services. And Microsoft Mesh and Hololens enable real-time collaboration.

Microsoft`s Mesh platform for communicating and working in mixed reality is an example of a part of the metaverse.

Microsoft Mesh allows you to work with each other in a virtual space that is superimposed on the real world. People can communicate, interact and work with virtual 3D models while physically being in different places - through virtual avatars.

Mesh can be connected through VR headsets, smartphones, PCs, and Microsoft's HoloLens 2 AR headset.

Who is Going to be the First?

One of the main questions that concern the current state of development of the metaverse is who will be first? Will any developer manage to enter the market with a finished product before the others? If so, it will be the company that has the opportunity to play the role of a "virtual god" in the created metaverse.

The ideal for creating a single, sustainable, truly useful meta world would be a collaboration of all the companies working on the development of this object - but this is unlikely for many reasons, including a lot of competition. It remains to be seen whether the tech giants will manage their ambitions and collaborate.

How to Invest in Metaverse Stocks?

There are different ways to take advantage of the metaverse development, and the most popular one is trading through CFDs.

CFDs are one of the most widespread and flexible investment products in the world. Moreover, trading with CFDs brings you a whole lot of advantages, including:

• No Ownership

The key factor in CFD trading is the lack of ownership of an asset. For those who trade shares, it is not such an advantage: shares are stored in an electronic account, and it is not difficult to buy and sell them.

But it's different when it comes to forex or commodities. Trading forex is connected with currency conversion (which is not profitable), as well as with some difficulties in terms of profit tax. And you can't even talk about commodities: you wouldn't keep oil in your house!

Whoever trades CFDs is completely free of these problems. All that the trader possesses is a contract for the value of one or another asset (currency, oil, something else). As the rate of the asset rises - the contract value also rises. Everything is simple!

• Leverage

Perhaps, the main reason for CFD's popularity is that such a contract allows for using attractive leverage. Thanks to the leverage, a trader can place orders that are much larger than the sum of invested funds.

Let's say you buy shares of Tesla at $1000. Let's assume that if you have $10,000 in your account, you can buy about 10 such shares. Now let us imagine that you have a leverage of 1:10. Now it turns out that you can buy not 10 shares, but as much as 100, 10 times more!

Thus, you "scale" your position and increase your potential profit by the same factor of 10: each percentage change in the price of the asset will turn into 10% for your CFD sale. But that's not all: thanks to leverage, the amount of investment will also decrease (in our example - 10 times), that is, you will have more money to buy other contracts.

Profits in Either Direction

When trading CFDs, you can also make a profit when the price of an asset decreases, by simply selling the CFD. In such a case, if the stock falls, say, by 5%, the value of the CFD transaction will increase by the same 5%.

• Fractional investing

Another advantage of investing in metaverse stocks through CFDs is noticeable if your target is high-priced stocks (say, Amazon). You can invest almost any amount in a stock CFD, you don't have to shell out money for a whole stock. Thus, at $3400 per Amazon stock, many brokers allow you to invest as little as $50 in eligible CFDs.

Risks Associated with Metaverse Investing

Meta words is a promising project. However, there is still a possibility of losing money. In particular, there is a probability that the project will be closed at the development stage, or the acquired coins (if you invest in cryptocurrencies) or stocks will start to fall in value. Therefore, it is important to carefully analyze the system before investing, as well as to invest exactly the amount of money that you are not afraid to lose. A competent approach to project selection and careful monitoring of its development will allow multiplying the initial capital significantly.

Investing in Metaverse Stocks: Final Thoughts

After all, this trend is a catalyst for the growth of tech market leaders. The volume of the metaverse market could reach $800 billion by 2024.

In essence, it is a sphere that will function as the Internet, but in which our avatars will be able to move around and participate. Moreover, it will have its economy.

With the metaverse stock market set to increase in the next two years, the above mentioned companies could be big winners in the next wave of technology.

About AdroFx

Being a well-established brokerage company, AdroFx offers the best trading conditions to its clients from 200 countries. Founded by experts with a couple of decades of overall experience, AdroFx is one of the best platforms on the market for shares trading. Either a newbie or experienced trader, both will find here what they are looking for since the company provides various trading accounts for different trading styles and goals.