I have over $60,000 in one metaverse stock. That’s a huge chunk of my total life’s savings. So, why am I willing to risk so much? As you’re about to see, the company behind this stock is making some big moves.
And for my existing readers and viewers, you’ll likely know what stock I’m talking about – and thanks for sticking with me. Although, that’s why we’re going to start with some new metaverse stocks. I haven’t covered these opportunities before and they’re worth a closer look.
As a starting point, I created a fairly wide list of metaverse stocks…
List of Metaverse Stocks
- Advanced Micro Devices
- Dolby Laboratories
- Meta Platforms
- Seagate Technology
- Sony Group
- Take Two Interactive Software
- Unity Software
It’s hard to find pure-play opportunities. Heck, it’s even hard to come up with an agreed upon definition of the metaverse. Nonetheless, these companies are already putting effort into a metaverse future.
Some are helping build the networking infrastructure and hardware, while others are focusing on the software. Some are doing both! And as the metaverse grows, it’s going to unlock huge opportunities for creators, advertisers and brands. The fashion industry, for example, is already testing out selling digital accessories and clothing in the early metaverse.
I’ve seen some pushback on these models working but human behavior doesn’t change. People are willing to pay ridiculous prices for designer goods in real life. This is more often driven by seeking social status. And as the digital worlds improve, this human behavior will carry on.
Selling digital goods is also nothing new but it’s going to explode over the next five to 10 years. NFTs are just a taste of the market potential. And to be honest, I’ve been skeptical of NFTs from the start…
Much of the NFT market became an overhyped bubble. But nonetheless, some of the underlying concepts will be used in more sustainable ways for the metaverse.
So, getting back to the metaverse stocks list, very few of these stocks make my cut. Most – if not all – all are great businesses, but I’m a value investor. And the stock market – even after the recent pullback – is still overvalued based on many metrics.
I’m simply unwilling to pay lofty premiums. I take more of the Warren Buffet approach and focus on the price relative to underlying value. And maybe that’s thanks to doubling in finance and accounting, as well as passing the CFA exams. But I digress…
The metaverse stock that comes in third place is…
Intel Powers Metaverse Technology
Intel has lost some ground to competitors and investors have beaten it down. Although, this company is far from being down for the count. You can pick it up at a discount today and collect some solid dividends going forward.
I doubled down on Intel a few months ago. And today, I’m not going to focus on the valuation side of Intel. I’ve done that in a past video that explained why I’m buying Intel instead of AMD. Instead, I just want to briefly highlight how Intel will benefit from the metaverse…
For the metaverse to gain mass user adoption, computing will need to continue its doubling on many fronts. According to a senior VP at Intel…
Truly persistent and immersive computing, at scale and accessible by billions of humans in real time, will require even more: a 1,000-times increase in computational efficiency from today’s state of the art.
Intel is advancing transistors, packaging, memory, interconnect and many other technologies. And already, the company is a diversified cashflow machine. But it’s investing intelligently to regain, maintain and access new markets. Intel is well positioned to benefit as the metaverse expands. And best of all, it trades at a steep discount compared to its competitors.
For the second best metaverse stock on my list…
Tencent is a Top Chinese Metaverse Stock
Tencent is a tech giant in China. It has some comparable business models to Amazon, Meta Platforms, Microsoft and others. I’ll highlight its huge potential with the metaverse but first want to address a major risk…
Given added geopolitical risk – being a Chinese company – it trades at a discount relative to U.S. companies. The CCP has clamped down on tech companies to maintain control. It’s been painful as I’ve taken a large position in another Chinese tech stock, Alibaba. I’m down more than $15,000 on that position but I’m still holding tight.
I think long-term both Alibaba and Tencent still have great potential. And the worst of the Chinese clampdowns are hopefully over 🤞. If the CCP continues with new big company restrictions, it’s shooting itself in the foot. I believe some of its recent moves are doing more damage to China’s economy than the U.S. could do.
Fewer investors will invest in China and Chinese innovators will gravitate towards less restrictive countries. So, I’m sure the CCP understands it’s a tough balancing act and has put out some more recent positive “free-market” comments.
Nonetheless, it’s going to continue being a bumpy ride. And getting back to why Tencent is a top metaverse stock…
It’s a huge holding company with ownership in a wide range of technologies. It’s a leading social media provider, as well as a massive entertainment and gaming company. It also deals in advertising, fintech, and cloud and streaming services.
With near-term metaverse growth, its gaming properties and platforms will be a huge win. Tencent owns League of Legends and countless games. It also acquired more than 40% of Epic Games, the creator of Unreal Engine and publisher of Fortnite. Overall, its reach is a bit overwhelming and it continues to grow.
This helps Tencent make the cut for the best metaverse stocks, along with its steep discount to U.S. tech stocks. And the Chinese stock discount will likely persist but as the company grows its cashflows in the years ahead, its share price should follow.
Now, on to my favorite metaverse stock…
Meta Platforms Set to Dominate AR and VR
My largest investment is in Meta Platforms, formerly called Facebook. The company – following Mark Zuckerberg’s lead – has jumped headfirst into making the metaverse a reality. It’s investing billions of dollars each year. And already, the early signs are promising.
Meta has sold well over 10 million VR headsets. This was an important milestone and there’s now a critical mass. More users are bringing in more developers. And more developers are bringing in more users. In a recent game showcase, Meta announced a Ghostbusters game and also the first officially-licensed NFL game for VR. Now, these aren’t my cup of tea… but they’ll definitely sell more headsets.
The VR market is compounding and we’re seeing some big brands and industries jump into the metaverse…
Gaming is an important entry point for VR headsets. And standalone, that’s huge…
The gaming industry is larger than the film and music industry combined. But AR and VR are going to unlock massive growth in other areas as well. For example, there are already growing communities for VR fitness and mediation. On top of that, a big disruption on the horizon (pun intended) is collaboration and work in VR.
The soon-to-be-released Cambria headset will be more focused on productivity. This iteration won’t likely be the iPhone moment for VR. It’s set to be a higher end product that’s geared towards a smaller market… but based on the rate Meta is innovating, there’s likely to be a huge turning point with future products.
Overall, there’s still plenty of risk to helping build out the metaverse. It might not play out as expected and competition is already picking up. All the while, Meta is spending massive piles of cash. And its Reality Labs segment might not be profitable this decade.
… but Meta’s huge legacy social and advertising business can easily fund its metaverse ventures. Also, its success in those other areas should help with building and monetizing the metaverse.
I could go on for hours about AR and VR potential, as well as why Meta Platforms is likely to continue its lead. But for the sake of brevity…
A few final points I’ll make about Meta… its valuation is hard to pass up. It continues to grow faster than the market average but trades at a lower multiple. Meta is a cashflow machine that continues to grow even in the face of constant criticism. And it’s a founder-led company that’s playing the long-game.
Final Thoughts on Metaverse Stocks
With overall recent market volatility, there’s a good chance these metaverse stocks drop further. But that’s OK in my book…
Of course, it’s never fun to see my hard-earned savings vanish. But I’m playing the long-game. There’s a high probability that any short-term paper losses turn into long-term capital gains. If anything, further drops will give me better opportunities to buy more.
So, I hope you’ll stick around to see when, where and why I’m investing my hard-earned savings. And as always, I really appreciate any comments. Feel free to drop a note down below or on my YouTube channel. I read every one.