You may or may not want to live, work, and shop in a virtual world, but regardless of where you stand – the metaverse is getting built anyway.
Silicon Valley has been working on metaverse technology for years, including most of the top tech companies. And now that it’s beginning to go mainstream, it’s going to start seeing the payoff.
(If you’re still a little fuzzy about what this metaverse stuff is all about, just think of virtual reality (VR) and augmented reality (AR). By using special hardware and software – such as a smartphone or a dedicated headset like the Oculus – the user can have an immersive experience. It feels like you’re actually inside the virtual environment.)
According to financial services firm PwC, the global metaverse market will grow from $148.5 billion last year to $476.4 billion by 2025 and $1.542 trillion by 2030.
Longer-range forecasts are even more mind-boggling. Both Goldman Sachs and Morgan Stanley see the metaverse market exploding to about $8 trillion over the next two decades. That’s a 50X expansion.
Let’s dive into all the ways you can cash in on the metaverse now to get your share of those future profits – including 11 opportunities you can invest in today…
Invest in the Metaverse with Big Tech Stocks
The Big Tech companies saw the metaverse coming years ago, and just about every one of them has big plans for it.
From an investing perspective, buying Big Tech stocks won’t give you a ton of exposure to this trend. After all, each of the Big Tech companies have businesses that will dwarf their metaverse efforts, at least for several years. But that also means you’re taking less risk while betting on dependable, successful companies.
Here’s a look at five of your best Big Tech prospects…
1. Apple Inc. (Nasdaq: AAPL)
Apple has dabbled in augmented reality with the iPhone, but that’s just a taste of what Cupertino has planned for the metaverse.
During the January 27 earnings call, CEO Tim Cook said that Apple sees “a lot of potential in this space and are investing accordingly.” That most likely is a veiled reference to a long-rumored Apple AR/VR headset.
While the product apparently has been hit with still more delays, Apple’s track record says it will make a major splash in the metaverse space when it eventually is unleashed.
2. Meta Platforms Inc. (Nasdaq: FB)
The company formerly known as Facebook wants so badly to dominate the metaverse that it rebranded to reflect its new focus.
The company has had an eye on the metaverse since 2014, when it bought Oculus Rift for $2 billion. The ability to combine its leading VR hardware platform and metaverse-styled games like Horizon Worlds with its dominance of social media figure to make Meta a very powerful player.
CEO Mark Zuckerberg says he wants to bring the metaverse to at least 1 billion people.
3. Microsoft Inc. (Nasdaq: MSFT)
It looks like Microsoft has squandered any edge it had when it released the first HoloLens VR headset in 2016. Recent reports say the HoloLens team has stumbled, leaving the fate of the product in doubt.
But HoloLens isn’t the company’s only metaverse-related project. Microsoft Mesh is an attempt to bring VR tools into the workplace, an area where it can leverage Office and Microsoft Teams.
Microsoft also has plans to bring metaverse features to its Xbox gaming platform.
4. Alphabet Inc. (Nasdaq: GOOGL)
Google took an early stab at AR in 2013 with Google Glass, but the product received a lot of backlash over privacy issues.
Nevertheless, Google has continued to develop the technology and now has a new AR headset, code-named Project Iris, expected to launch in 2024.
5. Nvidia Corp. (Nasdaq: NVDA)
Nvidia isn’t typically thought of as one of the Big Techs, but it does have a hefty $628 billion market cap and is likely to be a key player in the metaverse sweepstakes.
At minimum, the chipmaker will benefit from the increased demand for graphics chips that the metaverse will bring. But Nvidia has also created a metaverse-oriented 3D software platform called Omniverse.
Last November, the company said more than 70,000 creators had downloaded the software.
Bonus: Metaverse ETFs
If you want an even safer way to play the metaverse, you can go the exchange-traded fund (ETF) route. There are two so far: The Roundhill Ball Metaverse ETF (NYSE: META), and this week, the Series Portfolios Trust – Subversive Metaverse ETF (BATS: PUNK).
But at least two more are in the pipeline. In December, ProShares filed an application with the U.S. Securities and Exchange Commission (SEC) for the ProShares Metaverse Theme ETF.
And in January, Fidelity filed an application for the Fidelity Metaverse ETF.
Invest in the Metaverse with Pure-Play Stocks
Investors seeking higher potential gains will want to look at companies with metaverse-focused businesses. But that means they’re also riskier.
These three stocks have been hit especially hard during the market turmoil of the past few months – each is down at least 50% from its November highs, creating a better entry point.
1. Roblox Corp. (NYSE: RBLX)
Many parents have heard of metaverse game company Roblox, as two-thirds of its more than 43 million active daily users are under age 16.
Roblox isn’t one game; it’s a platform that lets users create and play games for free. Revenue comes from selling an in-game currency that players use to buy items or experiences.
Roblox has partnered with multiple noteworthy companies looking for a presence in its metaverse. The list includes names like Nike, Chipotle, Ralph Lauren, Warner Music Group, Sony Music Entertainment, Vans, and Gucci.
2. Unity Software (NYSE: U)
Unity creates and sells software used in 3D game design (in other words, metaverse games).
The company says that its software was used to create 71% of the top 1,000 mobile games and more than 50% of all mobile games. This means that much of the existing metaverse was built using Unity’s code.
But the juicy part for investors is that Unity uses a SaaS (software as a service) subscription model.
As Adobe Inc. has proven, the subscription model provides a bigger, more steady revenue stream. The company has not yet turned a profit but is expected to start running in the black this year.
3. Matterport Inc. (Nasdaq: MTTR)
Matterport creates virtual “digital twins” of real-world physical spaces. It could be an office. It could be a home or commercial building for sale. It could be a shop. It could even be a tourist destination.
Matterport already does real-estate property modeling for Redfin and ReMax. Other clients include Airbnb, Hyatt Hotels, and the U.S. State Department. Matterport is collaborating with Meta (Facebook) as well.
MTTR went public via a special-purpose acquisition company (SPAC) last July and is far from profitable right now. But as the leader in “spatial data” (it has created 100X as many 3D spaces as all of its rivals combined), Matterport is well-positioned to capture the lion’s share of a $240 billion total addressable market in the years ahead.
Invest in the Metaverse with Cryptocurrencies
These three metaverse cryptos are also pure plays. Though riskier than stocks, they’re capable of delivering incredible gains.
Decentraland (MANA), for instance, started 2021 at about $0.08. It reached an all-time high of $5.90 on November 25 – for a gain of 7,275% in just under 11 months.
Axie Infinity (AXS) went from $0.59 to a high of $165.37 on November 5 – a gain of 27,928% in 10 months.
1. Decentraland (MANA)
MANA is an ERC-20 token that launched in 2017.
Decentraland is a virtual world you can explore (or rather your avatar can explore), filled with games, districts, and themed communities, among other digital destinations.
The MANA token is Decentraland’s coin of the realm. It’s used to buy and sell virtual items, including land. Holding MANA tokens also entitles a person to vote in Decentraland’s governing DAO (decentralized autonomous organization).
MANA is the number-one metaverse crypto by market cap. The token is widely available on crypto exchanges, including Coinbase, Kraken, KuCoin, FTX, and Gemini.
2. Axie Infinity (AXS)
The AXS token is a governance token for the Axie Infinity game, which is centered around digital pets (think Pokémon) called Axies. Each Axie is an NFT (non-fungible token) with particular attributes that come into play during battles with other Axies.
There’s also a “play-to-earn” component. The game has four main elements: battle, land, breeding, and marketplace.
The Axies, in-game items, and land can be bought and sold for Ethereum (ETH). The AXS token pays for the breeding fees and can be staked for rewards.
You can buy AXS on Coinbase, FTX, Kraken, Gemini, and KuCoin.
3. The Sandbox (SAND)
The Sandbox is a metaverse game ecosystem. Users can create, share, and trade in-world assets using the ERC-20 SAND token.
The ability to sell objects you create allows users to monetize the experience. One compelling quirk is that The Sandbox pays the player’s Ethereum gas fees.
The Sandbox has formed partnerships with companies like Adidas and Atari. Warner Music Group is planning to open a concert venue within The Sandbox virtual world. Rapper Snoop Dogg is building his mansion there, and someone paid $450,000 to be his neighbor.
You can buy SAND on Gemini, Kraken, Bittrex, KuCoin, FTX (it’s not yet available on Coinbase).
Ready to take a deeper dive into the metaverse? Make sure you check out this guide that covers all the fundamentals you need to know.
Advisory Board Member, American Institute for Crypto Investors
Follow me on Twitter @DavidGZeiler.