Metaverse stocks can be a simple way to invest in the metaverse, and many experts are bullish on their future value. However, they can also be a risky investment.
Metaverse stocks are emerging as a viable investment option that capitalizes on the increasing popularity of the virtual, online world. While getting in on the ground floor of an investment opportunity can pay off, whether you should invest in metaverse companies is determined by a number of factors, not the least of which is your risk tolerance.
The term “metaverse” refers to a collection of technologies that work together to create a shared online space based on virtual reality. Many experts believe that metaverse companies, many of which focus on blockchain gaming, virtual reality products, back-end technologies, or other areas, have a high growth potential.
Take the time to learn more about the companies involved, which stocks you might want to invest in, and how to buy metaverse stocks before you start investing in them.
What Exactly Are Metaverse Stocks?
Some predict that as the demand for virtual reality experiences grows, the metaverse will continue to expand and become a part of our daily lives.
Nobody knows for certain which metaverse platforms will gain traction. Metaverse optimists predict that the metaverse will evolve into a fully immersive alternate reality in which users will be able to work, socialize, shop, and spend a significant amount of time.
In 2021, Facebook changed its name to Meta and announced a $10 billion investment in its own metaverse, bringing metaverse investing into the mainstream.
Before Meta, the Roblox gaming company released its immersive cyber world in 2016. Roblox had grown to become a go-to metaverse platform by the end of 2021, with nearly 50 million daily users.
Aside from gaming and social media platforms, metaverse investors can buy stocks in software, 3D design, and technology companies involved in the metaverse. Unity, for example, is a popular metaverse investment because some predict that Unity’s immersive 3D gaming engines will power the metaverse. Autodesk and Nvidia are two other well-known metaverse stocks. Experts predict that their computing and design tools, which developers use to create 3D worlds, will help build the metaverse’s infrastructure.
Skeptics of the metaverse believe it is just a buzzword, gimmick, or passing marketing and branding fad. Whether you believe the metaverse is a passing fad or not will play a large role in your desire to invest in one or more of these stocks.
3 Top Metaverse Stocks
Microsoft is the 800 pound digital gorilla of the enterprise business market, but its video-game powerhouse, Xbox, should not be overlooked. With the acquisition of Activision Blizzard, Microsoft now has one of the world’s largest gaming empires. With such a strong and growing presence in video games, Microsoft could sail smoothly into the metaverse, and one it may largely control.
With services like the Xbox Game Pass subscription service and Xbox Cloud Gaming, Microsoft is undoubtedly changing the game (pun intended) in the video-gaming world (formerly xCloud). With such services, the barriers to entry into the gaming industry have effectively been eliminated.
With Xbox Game Pass and Cloud Gaming, there’s no need to buy expensive games for $79.99 up front, nor do you need to buy an expensive Xbox console. In essence, Microsoft may have single-handedly made triple-A gaming available to everyone.
As we get closer to the metaverse, I expect Microsoft to combine its VR expertise with its incredible gaming division to create an immersive offering that will be difficult to compete with.
If gaming holds the keys to the metaverse, Microsoft could rise to the top. Given that gaming will most likely be the first stepping stone into virtual realms, Microsoft may be a better bet than Meta. Work and other experiences will, of course, follow. Microsoft’s Teams Mesh virtual office place also stands out in the “metaverse for work” category.
Though the early days of the metaverse will be less of a game changer for Microsoft than for some of its peers, I am intrigued by the company’s foundation, given its diverse revenue stream. It appears to be best-in-class. If anything, Microsoft may be the company that takes us into the metaverse.
Then there’s Nvidia, a graphics-hardware company that refers to the metaverse as the “omniverse.” It’s difficult not to get excited when CEO Jensen Huang takes the stage to speak about the future of technology. Many people were undoubtedly ecstatic about Nvidia’s potential to power the digital realms of tomorrow.
Nvidia’s Omniverse platform appears to be cutting-edge. The company’s Omniverse, on the other hand, isn’t just for video games. The industrial applications of Nvidia’s Omniverse are also intriguing, with the unveiling of Omniverse Computing Platform Nvidia OVX at the company’s exciting GTC 2022 event.
Meta Platforms could be viewed as a pioneer in the virtual worlds of tomorrow, with billions of dollars committed to building the metaverse as Zuckerberg envisions it. Indeed, Zuckerberg’s metaverse initiatives could yield enormous returns in as little as five years. Nonetheless, Meta is primarily a social media company and the transition thus far has not been smooth.
Meta may not have the best video-gaming foundation for the big metaverse transition, according to some. Indeed, video games and experiences are likely to be the primary draws for the metaverse. Meta falls short in this regard. But with a huge bankroll of cash and the ability to innovate and buy innovation through acquisition, Meta can’t be ignored.
Metaverse Stocks: Pro and Con
Metaverse stocks, like any other stock, can be a promising way to invest in a sector or company that you believe has significant growth potential. However, there are some drawbacks to investing in metaverse stocks, such as risk exposure and a time-consuming research and purchasing process. Here’s what you should know before investing in metaverse stocks.
For investors looking to get in on new technology, metaverse stocks may be appealing. While all stock investing involves risk, and it is impossible to predict a stock’s future gain or loss, Bloomberg analysts predict that the metaverse will be worth nearly $800 billion by 2024, up from a $478.7 billion valuation in 2020.
You can buy fractional shares of some major metaverse stocks through a brokerage, allowing you to get in for a low price.
A diverse range of businesses: Many companies involved in the metaverse, such as Amazon and Microsoft, are already known as technology leaders in other areas and have a track record of developing large, successful tech products. If your investment budget does not allow you to invest in big-name companies, you can invest in less expensive up-and-comers instead.
Loss potential: Investing in any stock carries a significant level of risk, but metaverse stocks are even riskier because the metaverse is still in development and a metaverse company’s value can rise or fall unexpectedly. You could lose money if you invest a large sum of money in a single stock of a technology company.
While investing in individual stocks should always involve extensive preliminary research, investing in cutting-edge, speculative technology such as the metaverse and cryptocurrency necessitates even more time and analysis. Instead of researching and selecting individual metaverse stocks, consider investing in diversified metaverse funds. Roundhill Ball Metaverse ETF (METV), for example, is a passively managed exchange-traded fund that holds major companies such as Nvidia, Roblox, Microsoft, Unity, Amazon, and Autodesk.
Uncertain future laws:
Blockchain technology and cryptocurrency are expected to form the backbone of the metaverse’s digital economy, where users will trade digital currencies and assets such as virtual land. Blockchain is a distributed, secure, and traceable ledger that assigns unique values to intangible assets using data.
Because blockchain is a new technology, the Securities and Exchange Commission is still debating how to regulate blockchain-based investments. Because increased regulations may reduce investor and user interest, metaverse investing exposes you to some of the same risks as the currencies on which it is built.
If you’re new to investing, a financial advisor can guide you through the process of selecting investments and executing trades. And you can educate yourself about the metaverse on exchanges like Coinbase or Kraken.
Experimenting with speculative assets such as metaverse stocks and cryptocurrency can be an exciting way to invest with the potential for future gains, but it’s also an unpredictable, risky way to try to build wealth. DYOR and never invest more than you can afford to lose. The companies listed above (Microsoft, Nvidia and Meta) are used only as examples of metaverse stocks investors may consider.
Jay Speakman is a technology writer based in San Francisco, California. He writes on the topics of blockchain, cryptocurrency, DeFi and other disruptive technologies. Clients include Avalanche, Be[in]Crypto, Trust Machines and several blogs devoted to blockchain gaming. He will not rest until fiat currency is defeated.