Into the Metaverse: A look at FB, SNAP and others
16:29, 5 January 2022
Once the domain of science fiction writers, 2021 saw technology companies embrace a new digital frontier known as the metaverse, which is aimed at extending social media into a virtual 3D world. Capital.com looks at some pioneers in the space.
Meta Platforms
Facebook (FB) changed its name to Meta Platforms in October as the social media company pivoted into a virtual realm first thought up by sci-fi authors such as William Gibson and Neal Stephenson.
Gibson’s 1984 novel Neuromancer – part of a subgenre known as “cyberpunk” – described a virtual digital world accessed by hackers who could physically “jack in” using physical interfaces directly plugged into the human body. The concept was further refined in Gibson’s dystopian 1993 novel Virtual Light which involves a pair of virtual reality-enabled sunglasses.
The “metaverse” first appeared in Stephenson’s 1992 novel Snow Crash as digital real estate accessed using virtual reality glasses.
Meta Platforms wants to turn the metaverse into reality by augmenting real-life experiences with virtual technology. Mark Zuckerberg’s company already owns virtual reality hardware, buying headset maker Oculus VR for $2bn (£1.5bn) in 2014. Now known as Meta Quest, the company offers two VR headsets for gaming.
As at 11:24 ET (UTC-5) FB was down 1% to $332.36 per share. Over the past six months, the stock is down almost 6%.
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Snap
Staying in the social media space Snap (SNAP), the maker of social media app Snapchat, has invested for a virtual future with its alternate reality (AR) Spectacles – smart sunglasses that capture video and display AR images. The first pair were released in 2016.
Snap’s AR service enables content creators to embed AR images into Snapchat content using software such as Lens Studio and Lens Web Builder
As at 11:25 ET (UTC-5) SNAP was down almost 2% to $43.23. Shares have fallen 38% over the past six months.
Microsoft
Microsoft (MSFT) is also part of the metaverse as its Teams communication software – formerly known as Skype for Business – has added a mixed-reality component known as Mesh. Instead of a video image, participants now join as a virtual “avatar” or representation of themselves in a virtual space. The service is set to begin in the first half of 2022.
The Redwood, Washington-headquartered company also offers the Hololens, a headset that is intended as an AR tool aimed at manufacturing and construction, medicine and the education sectors.
As at 11:25 ET (UTC-5) MSFT was down 2% to $322.59. Shares have gained 16% over the past six months.
Matterport
Staying with applied AR, Matterport (MTTR) is focused on spatial data with equipment that turns any physical space into an immersive 3D digital twin using its proprietary range of cameras. Founded in 2011, the company has over 330,000 subscribers in more than 170 countries who have digitised over five million spaces across industries which include construction and real estate, enabling prospective buyers to go on virtual property tours rather than rely on 2D pictures.
Last month the company announced it would redeem all warrants to buy its shares, potentially adding almost $80m to its balance sheet.
As at 11:26 ET (UTC-5) MTTR was down 6% to $17.12. Shares have added 12% over the past six months.
Unity
Unity Software (U) also wants in on the metaverse. The maker of 3D software used in video games and movies is adding an artificial intelligence (AI) component to its ArtEngine software. Much of the content on the metaverse is created using software art packages such as Unity.
As at 11:26 ET (UTC-5) U was down 2% to $126.91. Shares have gained 18% over the past six months.
Online Gaming
Tracing their roots back to the 1990’s, online gaming worlds can also be considered as a metaverse of their own as they connect millions of players worldwide in real time.
Amongst the listed companies with online player bases, investors can look at Roblox (RBLX), Electronic Arts (EA) with its Star Wars and Battlefield franchises and Take-Two Interactive Software’s (TTWO) Rockstar Games makes Grand Theft Auto and Red Dead Redemption 2, two games with thriving online player bases.
Activision Blizard’s (ATVI) World of Warcraft and Call of Duty franchises have kept many gamers glued to their seats – including actor Henry Cavill who missed an important phone call because he was too busy playing World of Warcraft.
Another way to invest in the metaverse are exchange traded funds (ETFs). Rather than investing in an individual company’s shares that have the potential to lose value, an ETF spreads the risk by pooling together more than one company’s shares into an exchange-traded product that typically has lower fees than traditional mutual funds.
Roundhill Investments offers the $933m Meta ETF which tracks stocks in the metaverse.
Vanda Research tracks retail investment flows and released a table of metaverse-related stocks which have received significant inflows since Facebooks name change.
“These stocks will probably become household names in coming quarters if they aren’t already,” Vanda Research said.
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