3 Metaverse Stocks to Buy Now
Investing in the Metaverse has become a frenzy since Facebook – that is, Meta platforms (NASDAQ: FB) – decided to grow up in the digital world and spend billions a year developing it. Not only is it likely that powerful new companies will be created as the metaverse takes off, but even more companies could benefit amply from the advancement of technology in the decades to come.
With that in mind, three Fool.com contributors have three Metaverse stocks that you should be considering right now: Unity software (NYSE: U), Netflix (NASDAQ: NFLX), and Tencent (OTC: TCEHY). Here’s why.
A “construction company” for the Metaverse
Nicholas Rossolillo (Unity Software): if NVIDIA Co-founder and CEO Jensen Huang is right, there will be as many “worlds” in the Metaverse as there are websites on the Internet today. That makes sense since the metaverse is just a virtual embodiment of information and experiences on the internet. Any business and organization, and even individuals, might one day be able to launch their own virtual rooms in the metaverse and connect them to the broader internet.
But to get to that point, we need tools that make it super easy to build such worlds (like e.g. Shopify and Wix.com do today for website creation). One such suite of creativity tools could be from Unity Software. Unity’s solutions for creating, executing, and monetizing 3D content have made their mark in the video game industry, but they have expanded far beyond that – attracting users in tech, manufacturing, education, live sports, and more.
The sheer breadth of options Unity has to expand is only limited by the imagination. Millions of developers around the world are already using Unity, and content created with the platform could be limitless if the metaverse turns out to be more than a hot topic. But with the tens of billions of dollars being invested in next-generation computing and web experiences, I think it’s a foregone conclusion that the latest iteration of the digital world will persist.
The latest Metaverse craze and a stellar earnings update for the third quarter of 2021 (revenue of $ 286 million up 43% year-over-year; fourth quarter forecast is for another 29-32% increase) have the Unity -Stock rocked lately. Shares are up 24% year-to-date, with all of that bullish move since Facebook was renamed Meta-Platforms and Unity’s last quarterly report.
Investors are clearly excited about Unity Software’s metaverse potential. With an expected ratio of company value to sales for the current year of 52, the share has a premium price. But if you want to get into virtual world development early in the game, this is a great place to start.
Another great reason to own Netflix stock
Anders Bylund (Netflix): No, that’s not a typo. In my opinion, Netflix looks like a great way to invest in the Metaverse. In fact, the media streaming veteran must have seen this change from a mile away and actively invested in the upcoming virtual reality revolution. Work on virtual reality experiences has been going on for some time.
I’m not talking about the basic Netflix app for the Oculus Quest headset. This is just another way to see the same Netflix titles you’d see on your phone, tablet, computer, set-top box, etc. – wrapped in a cozy 3D rendering of a living room somewhere in the Swiss Alps. It’s an aging, clunky experience that’s prone to sudden crashes and one day that really could use a troubleshooting update.
We don’t look at the last Squid game Neither does titles for Oculus. This is a fan-made game that tries to replicate the “red light, green light” experience from the first episode of the South Korean series of the same name. It’s not even available in the Oculus App Store, it has to be sideloaded from unofficial sources. Netflix wasn’t involved in the development of this game, although Chief Operating Officer (COO) Greg Peters doesn’t mind that someone else took the time to develop it.
And the Metaverse effort goes way beyond that Eden unearthed Game, although this is a step in the right direction. Based on the Netflix original anime series, this Netflix-sponsored game was released for free in the Oculus App Lab portfolio as a project under development Eden. Eden unearthed is not a big game, but offers intuitive controls and a dazzling virtual reality view of the fictional world of the show.
So here is the real revelation. When Netflix hired its first video game operations manager four months ago, it went straight to the heart of the Metaverse project. The company’s vice president of game development is Mike Verdu, who was brought straight from Facebook’s augmented / virtual reality project two months before Meta Platforms’ official name change. Verdu might know something about Meta’s future Metaverse plans, and he’s now the driving force behind Netflix’s newly launched video game services.
Netflix isn’t known for half-heartedly pursuing a growth market. The streaming service launched globally as investors expected a number of baby steps with only a few new countries per mini-launch. When the original content proved to be a winning strategy, the company began pouring billions of dollars into film and show production – which is now dominating the Hollywood awards season.
And a few humble mobile games might be cool, but what if Netflix really wants to create immersive and story-driven experiences within the metaverse? Well, they hired the very guy who moved them in that direction.
So yeah, I’m serious. Netflix should be a big winner in metaverse-based media content and immersive gaming experiences. Just wait and see.
This technology giant has all the building blocks for the metaverse in hand
Billy Duberstein (Tencent Holdings): When you think of the metaverse, you might think of a loaded social media platform. The merging of virtual and physical worlds could of course also apply to video games and bring them to another level of immersion. It would also not be difficult to imagine metaverse business applications that allow colleagues from different parts of the world to work together.
Chinese internet giant Tencent’s two most profitable companies today are – you guessed it – video games and social media, which position it reasonably well to capitalize on any Metaverse opportunity. Tencent is the country’s largest game distributor for both mobile devices and personal computers (PCs). It owns a number of video game studios, including Epic Games, the company behind the immersive global hit Fourteen days and the Unreal game engine platform used by both Epic and other developers. Tencent is also the parent company of the social network and “super app” WeChat, which has more than 1.26 billion users and is central to the daily lives of many citizens in China.
In the meantime, the company’s latest growth focus is on the so-called “Industrial Internet”, which essentially consists of cloud-based corporate software applications that could one day also take part in the Metaverse. In fact, on the recent conference call with analysts, management said that some of its most widely used enterprise software products, such as WeCom, Tencent Meeting, and Tencent Documents, aren’t even monetized – but Tencent’s fintech and business services segment was still growing 30% . Year for year.
In a new twist, Tencent also just unveiled three proprietary semiconductor designs for artificial intelligence, video transcoding, and networking. Other US tech giants have developed their own proprietary chips in recent years, but this was a new step – or at least a newly announced step – for Tencent.
The company holds leadership positions in China in not just one but several potential Metaverse use cases. a new interest in chip design; a story of innovation; and enormous financial resources. With all of that in mind, Tencent seems very likely to be a formidable player in the metaverse, and possibly a global leader.
Meanwhile, regulatory crackdown in China has given investors an opportunity to buy Tencent stock about 33% below its all-time high, though Tencent is probably the best-armed company to weather this period of high government interference – and from the other side.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all reflect critically about investing and make decisions that will help us get smarter, happier, and richer.