It’s safe to say that the initial hype surrounding metaverse stocks has somewhat faded away. Given the burgeoning influence of artificial intelligence (AI), the metaverse has had to take a back seat. Moreover, businesses that once embraced the concept are now looking to build their prowess in AI instead. Coffee giant Starbucks (NASDAQ:SBUX) announced its exit from the metaverse, which could be the start of many.
Despite growing skepticism surrounding the metaverse, ignoring its massive long-term potential is tough. According to Statista, the metaverse market could potentially skyrocket to a market volume of $507.80 billion by the conclusion of the current decade. Moreover, the metaverse and AI aren’t standalone concepts and should complement each other in developing more immersive, intelligent environments. The convergence of AI with the metaverse holds tremendous promise, which adds to the long-term attractiveness of metaverse stocks.
Metaverse Stocks: Meta Platforms (META)
Meta Platforms (NASDAQ:META) is perhaps a no-brainer for investors looking for exposure to the metaverse industry. Though the metaverse concept has existed for decades, it gained widespread attention after Facebook rebranded to Meta in October 2021. This move signaled a powerful belief in the metaverse, a phenomenon which Meta’s CEO Mark Zuckerberg believes is a ‘successor to the mobile internet.’
Nevertheless, Meta’s journey to commercializing the metaverse sphere has been far from easy. Realty Labs, dubbed as the company’s ‘metaverse segment,’ has lost more than $42 billion since the end of 2020. The tech giant had to put the brakes on its metaverse endeavors in advancing its AI and cost-cutting plans in its’ Year of Efficiency’ last year. However, with its bombastic quarterly performances in 2023, it now has the impetus again to pour money into advancing its metaverse endeavors. Mr. Zuckerberg deems the metaverse as the ‘next frontier’ in the tech realm, which means it’s unlikely that Meta will be slowing down in this regard.
Roblox (RBLX)
Popular gaming platform Roblox (NYSE:RBLX) is perhaps an OG metaverse stock. The metaverse gaming platform boasts a robust ecosystem, which has helped attract a massive number of active users over the years. It soared during the pandemic, when social distancing measures significantly increased entertainment demand, enhancing the platform’s appeal. Facing tough comps post-pandemic, the company experienced a sizeable dip in revenues. However, its impressive results in recent quarters underscore the platform’s enduring appeal.
It recently posted its fourth quarter results, where revenues jumped to $750 million, rising a healthy 30% year-over-year (YOY). Additionally, bookings (a measure of virtual currency sales) rose 25% YOY to $1.13 billion. Moreover, daily active users increased 22% YOY to finish off the period at 71.50 million.
As we advance, it expects its 2024 bookings to fall in the $4.14 billion to $4.28 billion range, significantly above the $4.06 billion estimate. Also, in a letter to shareholders, the company expects at least a 20% improvement in its top-line growth through 2027.
Roundhill Ball Metaverse ETF (METV)
It’s no secret that the metaverse is currently a speculative investment avenue, and realizing its potential may take several years. Given this, placing your bets on a metaverse ETF such as Roundhill Ball Metaverse ETF (NYSEARCA:METV) could be a more prudent approach, offering diversified exposure to the sector’s top players.
With an expense ratio of roughly 0.60%, the METV ETF boasts holdings in some of the biggest tech giants in the world. Some of its holdings include Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Roblox, and others. Moreover, its top ten holdings constitute roughly 51.50% of its total investments. For a high-risk sector such as the metaverse, you’d want an ETF to have a higher concentration in its top holdings. Though it means less diversification and lower upside, but it offers greater stability. Many of its top holdings are the familiar tech giants that have been gaining big due to AI. Consequently, METV stock is up over 20% in the past six months.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
