CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

Investing in the metaverse: First infrastructure, then content

By Daniela Ešnerová


Updated

Figures in virtual environment with VR headset.
Since Facebook hyped its switch to Meta, everyone is trying to make a play for the metaverse. But which stocks are most likely to succeed? – Photo: Shutterstock Photo: Shutterstock

With Facebook’s transition into Meta, first announced last October, the metaverse swiftly became a much-hyped topic.

Far from being a new concept, the term “metaverse” was first coined in 1992 by sci-fi writer Neal Stephenson in his novel Snow Crash, where where “humans, as programmable avatars, interact with each other and software agents in a three-dimensional virtual space that uses the metaphor of the real world”.

But since Meta’s presentation at its renaming in October, a host of companies have come forward with metaverse ambitions of their own.

‘First infrastructure and engineering, then application and content’

When investing in the emerging metaverse, it is important to keep an investment timetable in mind.

The Hong Kong-listed CSOP Asset Management’s Metaverse Concept exchange-traded fund (ETF) started trading on Monday. The ETF tracks companies in the following categories: metaverse infrastructure, metaverse engineering, metaverse application and metaverse content.

“In the first stage – say five years – we believe the infrastructure and engineering software side have more growth potential, and these two areas will be allocated with higher weightings,” a spokeswoman for the asset manager said.

“As we move into the second stage where technology bottlenecks are largely solved, we might be seeing more applications and contents flourishing, and taking a larger share of users’ times spent, so more weightings will be allocated to the application and content sides,” she added.

What is your sentiment on MSFT?

425.27
Bullish
or
Bearish
Vote to see Traders sentiment!

The ultimate metaverse ‘winner’?

“We are not certain whether Facebook is going to be the ultimate winner in the metaverse because as we know, not only will Facebook already have spent about $10bn (€8.14bn, £7.36bn) last year on metaverse, they need to spend another tens of billions to create it,” said Stephen Yiu, lead manager of £1bn Blue Whale Growth Fund.

AMD

166.24 Price
+1.020% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.14

NVDA

948.55 Price
+2.530% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.11

AMC

4.78 Price
+3.100% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.09

GME

22.79 Price
+2.270% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.14

Yiu recently sold his fund’s Meta holding in time before the company posted poor results, which sent the share price plummeting. But the selling was not on the back of the fund manager’s distrust in Facebook’s ability to build the metaverse. The fund has an investment objective of positive returns over any given period.

Said Yiu: “We are maybe five to 10 years away from this thing. And at the same time, we have seen increased interest from other tech giants such as Google [GOOGL], Apple [AAPL] and Microsoft [MSFT] to do something in metaverse.

“And the problem is, we don't know at the moment who is going to be the ultimate winner. If we look at the operating system, mobile operating system, there’s only two players: one is Apple iOS, the second one is Google’s Android. We are not going to have like five different metaverses out there 10 years from today, if it materialises. It could be [just those] two.

“We don’t actually know whether Facebook is going to win in this battle. In the meantime, they’re going to spend a lot of money to develop this, hoping that they might win.

“But who is the ultimate winner? Who is the proven winner? In this context, irrespective of who owns the metaverse, it is Nvidia [NVDA]. If 10 years, it is Microsoft and Google, or maybe it’s Apple and Facebook – we don’t care. Nvidia is going to be the heart of this, because everyone is going to need Nvidia graphics processing units to build it.

“So I think you could say we also like Nvidia on the on the back of [the fact] they would be the ultimate winner or capture a big part of the metaverse ban. But obviously, we don’t factor that in at the moment, [as] it’s not going to happen in the next few years.”

 

Markets in this article

GOOGL
Alphabet Inc - A (Extended Hours)
177.29 USD
0.71 +0.400%
AAPL
Apple Inc (Extended Hours)
191.20 USD
1.2 +0.630%
MSFT
Microsoft Corp (Extended Hours)
425.27 USD
4.95 +1.180%
MSFT
Microsoft Corp (Extended Hours)
425.27 USD
4.95 +1.180%
NVDA
NVIDIA Corp (Extended Hours)
948.55 USD
23.44 +2.530%

Rate this article

Related reading

Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading