Top metaverse stocks to cash in on the nascent Web3 virtual universe
The term “metaverse” took the world by storm in 2021 as leading technology companies competed to be at the forefront of the internet’s next phase.
The world was curious to know what the “metaverse” meant, and whether this new technology was a fad or a significant long-term development.
Social media giant Facebook (META) took the leap and rebranded itself to Meta as it bet its future on the metaverse. Companies like Nvidia (NVDA) have developed product offerings focussed on the development of virtual worlds in the metaverse.
In this article, we explain what the metaverse means and look at the road ahead. We have listed some metaverse-focused companies in the industry, beyond the bigger names like Meta and Nvidia, who look to contribute and profit from the emerging phenomenon.
Future internet: What is the metaverse?
The metaverse has been touted as the next phase of the internet, one made of virtual worlds where the experience is more immersive. It remains a broad-based term, with much of it still being envisioned and developed.
A major differentiating characteristic of the metaverse to the internet is the existence of a virtual economy supported by cryptocurrencies and non-fungible tokens (NFT).
“In technical terms, the Metaverse is differentiated from today’s web via new technical capabilities, experiences, widely adopted standards that enable interoperability of virtual goods and currencies, and a robust virtual economy that is broadly similar to that of the ‘real world’,” said metaverse index provider Ball Metaverse on its website.
In October 2021, the metaverse gained the world’s attention after social media giant Facebook rebranded to ‘Meta’ in a bid to put the Mark Zuckerberg-led company at the centre of this exciting development.
“The metaverse will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world. It will let you share immersive experiences with other people even when you can’t be together — and do things together you couldn’t do in the physical world,” said Meta.
Investing in the metaverse: The Ball Metaverse index
In order to help our readers find out how to invest in the metaverse, we’ve compiled a list of metaverse stocks to buy based on the Ball Metaverse Index.
A number of metaverse-focused exchange traded funds (ETFs), like the Roundhill Ball Metaverse ETF (METV), track the performance of the index and make it more accessible to retail investors.
According to its website, the Ball Metaverse Index is a selection of companies that will technically enable the metaverse, and benefit from its generated revenues and profits. The index’s constituents are based on the research and analysis by an expert Council with domain knowledge. There were 43 companies on the Ball Metaverse index, as of 29 August 2022.
What is a metaverse stock, and what types of companies are added to the Ball Metaverse Index? Let’s find out below:
Metaverse stocks are categorised into seven groups in the Ball Metaverse Index:
Hardware – Companies that sell and support consumer and enterprise hardware used to access, interact with or develop the metaverse.
Compute – Companies that enable and supply computing power to support physics calculation, data reconciliation and artificial intelligence, among others.
Networking – Companies that provide, manage and transmit data.
Virtual platforms – Companies developing and operating immersive three-dimensional simulations and worlds for consumers to interact with.
Interchange standards – Companies that provide real-time connections, high bandwidth and decentralised data transmission.
Payments – Companies that provide digital payment processes, and fiat on-ramps to cryptocurrencies.
Content, assets and identity services – Companies that design, create, sell, store and manage digital assets such as NFTs and cryptocurrencies.
Top metaverse stocks: Matterport to Galaxy Digital
Here is a list of the top five biggest constituents on the Ball Metaverse index, as of 29 August 2022.
Matterport
Virtual reality company Matterport (MTTR) was the top index constituent on the Ball Metaverse index, as of 29 August 2022.
Matterport is a spatial data company that focuses on digitalising physical buildings and space into dimensionally accurate digital copies.
The company’s products are used in the real estate, construction, hospitality and retail industries to reproduce 3D virtual representation of building structures, equipment and other physical contents which can be analysed and explored on smartphones and computers.
Matterport offers scanning hardware devices, software subscriptions, data licensing, and smartphone applications to its customers.
The company reported full-year total revenue growth of nearly 30% on a year-on-year basis to over $111.1m in 2021. Full-year net losses widened to $338m in 2021, from $14m a year ago.
Subscription revenue accounted for about 55% and product revenue accounted for about 29% of Matterport’s total revenue in 2021.
According to its annual 10K filing, Matterport’s total cash, cash equivalents, and investments stood at $668.6m on 31 December 2021, compared to $52.3m a year ago.
Snap Inc
Camera company Snap Inc (SNAP) is next on our list of metaverse investing stocks. The Snapchat owner had the second highest index weight in the Ball Metaverse index, as of 29 August 2022.
The company’s core social media smartphone application has augmented reality (AR) capabilities built within the application. Snapchat’s Snap Map and Spotlight features let users create highly personalised maps and share user-generated content with the Snapchat community.
Snap also sells AR-powered glasses, which are fully integrated with Snap’s desktop application designed for AR creators and developers. The company is researching a new approach to create digital images with the use of AR technology.
The company generated nearly all of its revenue through advertisements, and recorded full-year revenue of $4.1 bn in 2021 – up 64% from a year ago.
Snap Inc’s full-year net losses narrowed to $487.9 m in 2021 from $994.8m in 2020. Cash, cash equivalents, and marketable securities were $3.7bn, as of 31 December 2021.
Roblox
Next on our list of top stocks for investing in the metaverse is virtual reality company Roblox (RBLX).
The company’s main product offering is a 3D digital world called Roblox Clients, where users can personalise avatars, interact with other participants and explore developer-built experiences.
Roblox has an in-built digital currency called Robux, used by customers on in-game experiences and items. Developers and creators earn Robux for building experiences and items for users to purchase.
Roblox’s ecosystem includes the Roblox Studio, which offers free toolsets to developers and creators to build and publish items, and the Roblox Cloud, which provides services and infrastructure to support the Roblox platform.
In 2021, the company’s full-year revenue more than doubled from a year ago to $1.9 bn. Full-year net losses widened to $491.7m from $253.3m in 2020.
As of 31 December 2021, Roblox had cash and cash equivalents of $3bn.
Edgio
Content delivery network provider Edgio (EGIO) was the fourth largest constituent on the Ball Metaverse index, as of 29 August 2022.
The company was known as Limelight Networks before rebranding to Edgio in June 2022. It currently trades under the ticker symbol ‘EGIO’ on the Nasdaq Stock Exchange.
Edgio provides its clients with content delivery services, edge security, video services, AppOps and Jamstack application architecture. Its offerings aim to provide the highest quality of fast, seamless and uninterrupted digital experiences to end users.
The company’s flagship offering is Edgio AppOps, which provides web application development tools, analytics insights and multi-layered cloud security capabilities under one platform.
According to Edgio, it targets media, high tech, software, gaming, enterprise and other organisations for which the delivery of digital content and applications are critical to the success of their businesses.
In 2021, full-year revenue fell over 5% yoy to $217.6m. Full-year net losses widened to $54.8m from $19.3m a year ago, according to Edgio’s annual 10-K filing.
Edgio’s cash, cash equivalents and marketable securities classified as current amounted to $79,325, as of 31 December 2021.
Galaxy Digital Holdings
Closing this metaverse stock list is digital asset manager Galaxy Digital Holdings (GLXY).
The company was formed in 2018 to facilitate the entry of institutional investors to the cryptocurrency sector.
Galaxy Digital Holdings provides institutional-grade trading platforms, asset management services and financial advisory services. The company also has a venture capital arm and carries out bitcoin mining operations.
As of 29 August 2022, the company had over $2.1bn in assets under management. In 2021, Galaxy Digital Holdings reported a 345% year-on-year jump in full-year net comprehensive income to $1.7bn.
Galaxy Digital Holdings is currently listed in the Toronto Stock Exchange under the ticker ‘GLXY’. The company stated that it intends to complete its proposed reorganisation and domestication to become a Delaware-incorporated company and list on the Nasdaq upon completion of an ongoing Securities and Exchange Commission (SEC) review.
Final thoughts: A nascent sector
Other notable companies in the Ball Metaverse index were Instagram parent Meta (META), graphic card specialist Nvidia (NVDA), crypto exchange Coinbase (COIN), smartphone leader Apple (AAPL), e-commerce giant Amazon (AMZN), South Korean electronics firm Samsung (SMSN) and Japanese game developer Nintendo (7974).
At the announcement of the rebranding of Facebook to Meta in October 2021, company founder Mark Zuckerberg noted that “the metaverse will not be created by one company.
“It will be built by creators and developers making new experiences and digital items that are interoperable and unlock a massively larger creative economy than the one constrained by today’s platforms and their policies.”
The metaverse is still in a nascent stage. If fully realised, the metaverse has the potential to disrupt industries, ranging from education, entertainment, communication, retail, gaming and many more.
According to Tarik Chebib, chief revenue officer at Capital.com, the metaverse needs to get past three milestones to see mainstream adoption: hardware, software and demand.
“Demand wise, we are definitely ready for the metaverse if you just look at the gamers. We’ve got about 3.2 billion gamers in the world,” said Chebib.
“From a hardware perspective, I don’t think we are quite there yet. We need it to be seamless. I don’t want to wear big goggles and run around in my living room. I want something that does not intrude my day-to-day.”
Note that analysts, forecasts and predictions can be wrong.
It is important to always conduct your own due diligence. Remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals. And never trade money that you cannot afford to lose.
FAQ
Does the metaverse have a stock market?
The metaverse is touted as the next phase of the internet, one which will be more immersive and powered by its own economy. There are companies listed in the stock market that are focused towards the development of the metaverse.
What is the biggest metaverse company?
Some of the biggest companies on the Ball Metaverse index, as of 29 August 2022, were Apple, Amazon, Microsoft, Nvidia and Meta Platforms.
How to invest in the metaverse?
You can find companies that are developing metaverse-focused products and services. There are several metaverse-themed ETFs in the market, such as the Roundhill Ball Metaverse ETF (METV).
However, it is important to always conduct your own due diligence. Remember that your decision to trade or invest should depend on your risk tolerance, expertise in the market, portfolio size and goals. And never trade money that you cannot afford to lose.
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