Top 10 metaverse stocks to watch
The metaverse is more than a new frontier of online gaming, it’s the latest mode of experiencing virtual and augmented reality. What’s more, it’s not in the future, it’s here. Learn how to trade metaverse stocks with us.
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10 metaverse stocks to watch
We’ve selected our stocks based on their prominence in the ground-breaking Ball Metaverse Index. The index includes companies with diverse – but essential – roles to play in bringing the Metaverse to fruition. These are not necessarily the best or biggest stocks by market cap. Learn more about the Ball Metaverse Index.
Roblox is an online gaming company, social network and content creation platform that’s pitched as one of the leaders in the virtual world of the metaverse. The company had an accelerated rate of success, listing at $41.9 billion and reaching a valuation of $45 billion a month later.1
The company has positioned itself as more than just a gaming platform, already hosting concerts in 3D for Hollywood superstars such as Lil Nas X, David Guetta and more. To date, there’s been over 24 million 3D experiences for players to take part in.
In Q4 2021, Roblox had 49 million average daily active users, up 33% in comparison to the same period in 2020.
Its revenue year on year (YoY) in 2021 was $1.9 billion, 108% higher than the previous year. This can be contributed to the millions of daily users as well as the nearly $2 billion spent by its consumers over last year. While the company is yet to turn a profit, the number of hours of engagement is up 35% YoY – forecasting positive news.2
Nvidia is a recognised name in the tech space, growing in popularity since going public in 1999. The company has been creating hardware that supports the metaverse technology, partnering with gaming giants Xbox and PlayStation to supply graphic processing units (GPUs) used on the consoles.
In addition to supplying the hardware that makes metaverse participation possible, Nvidia develops software products. The software, dubbed the omniverse, enables users to participate in a simulated reality through artificial intelligence and scalable computing. This enables businesses to solve issues such as identifying inefficiencies in factories and designing 3D models of infrastructure.
To date, Nvidia had a great fourth quarter, recording revenue of $7.6 billion, up 53% from a year earlier and 8% from Q3 2021.3 The increase was attributed to exceptional demand for Nvidia computing platforms.
At the time of writing (March 2022), Nvidia has a market cap of $665 billion. Reports have suggested that Nvidia’s omniverse could power them to $140 billion in annual sales and an annual earnings per share (EPS) of $28 by 2030.4
Better known as Facebook, Meta Platforms was early to switch from only focusing on social networking apps to the world of virtual reality (VR). The company’s technology, the Oculus VR headset, is its latest innovation.
However, the reality lab division of the company responsible for its metaverse and virtual reality forays have been burning money instead of making it. In FY21, the division spent over $10.2 billion. The enormous investment funded the research and development into its metaverse.
According to CEO and chairman of Meta, Mark Zuckerberg, this is the annual burn rate at which the division will run for the foreseeable future.5 Nevertheless, Meta Platforms’ VR and AR segment made $2.2 billion in revenue in FY21.
The ‘family of apps’ division has been showing steady growth in both revenue and profits over the past few years. Despite the recent controversy over antitrust policies, the apps division’s revenue has grown from $70 billion to $115.7 billion while the income grew from $28.5 billion to $56.9 billion.5 The income is made predominantly through selling advertising space.
There’s been a drop in Meta’s share price over the last few years, despite revenue and profits going up. The company has been working on buybacks of company shares in hopes of improving the share price. Currently, Meta Platforms has a market cap of $556 billion.5
Unity Software is renowned for its development of real-time 3D software, and creating engines for mobile games, VR as well as augmented reality. The software is used in half of the world’s 3D content.
The performance that Unity has shown recently indicates the company’s growing prominence in the metaverse space. Its revenue increased in Q4 2021 by 43% YoY, reaching $315.9 million, while the total reached for the entire year was $1.1 billion, up 44%.6 The sales growth over the current fiscal year was up 35%. The president and CEO of Unity John Riccitiello reported that the increase was attributed to ‘exceptional execution and innovation by the Unity teams’.
Despite the revenue made, Unity spends a lot of money on research and new development that affects its bottom line. Even with its $31 billion market cap (March 2022), the share price has dropped approximately 63% compared to November 2021 highs.6
Microsoft has been a titan in the tech space for many years. With the addition of the video game company Xbox to its portfolio, its transition into the metaverse has been much smoother compared to its competitors.
What’s more, it’s able to integrate the metaverse into its full range of products such as Microsoft Teams, which facilitates virtual meetings in schools and the workplace. With Microsoft cornering the market on both the professional setting and gaming fronts, it’s one of the popular stocks to watch. Microsoft also came out with its own VR headset HoloLens in 2016, which hasn’t hit the anticipated returns.7
The company also acquired Activision Blizzard, which owns the popular gaming franchises Call of Duty and Candy Crush Saga for a sum of $68.7 billion.8 The deal will put Microsoft in great stead to dominate the future of online gaming as it shepherds video games into the metaverse. As of March 2022, the market capitalisation of Microsoft is $2.2 trillion.
Snap is estimated to be further in its development of the metaverse compared to Meta Platforms.9 The two social media giants will have a large chunk of the market share of social networking users in the virtual arena. Snap’s interface is leading the race as it enables users to customise their virtual presence, creating 3D Bitmoji characters that they can use when chatting.
Snap is also developing much slicker AR glasses (Spectacles) that are more fashionable than the available tech. The gadget relays digital images and data on a field that you can manipulate to perform your desired need. For example, you can use the Snap camera to scan real-life items that’ll trigger a search on Amazon for said product.
In Q4 2021, Snap reported an increase of 20% YoY on daily active users to 319 million in total. The revenue in the fourth quarter is up by 42% to $1.3 billion while the entire year revenue increased 64% YoY to $4.1 billion.10 Snap partnered with A-list celebrities such as Kim Kardashian and Mariah Carey and brands like cosmetic company MAC, which boosted its brand awareness and performance. The market cap is $57.5 billion (March 2022).
Despite Sea going public just over a decade ago, the company has made significant strides in the metaverse space – none more impactful than the acquisition of artificial intelligence-based gaming company Refract. Sea raised funds amounting to $6.3 million to help develop technology you can wear, known as AXIS, that supports full-body motion capture.
Refract has also bought game developer Deep Dive Studios, which will create immersive online gaming titles such as the FreeStriker combat game. Sea also has made other acquisitions in the gaming arena, facilitated by its game developing and publishing division called Garena and its investment arm Sea Capital.
In the fourth quarter of 2021, Sea’s revenue went up 105.1% to $3.2 billion from $1.5 billion the previous year. The performance was driven by the popularity of their games. However, the company reported a loss and fell short of Wall Street estimates in earnings, posting a negative $617.6 million compared to -$523.59 million in last year’s Q4.11
The performance was largely due to concerns over ‘some moderation in online activities and fluctuations in user engagements.’ Additionally, Chinese heavyweight Tencent reduced its investment into Sea from 21.3% to 18.7%. This act led to Sea’s stock price falling by over 11%.12
Just when you thought there isn’t a space that Amazon isn’t penetrating, you learn that they’re actively recruiting to extend towards the metaverse.13 The transition is only natural seeing that they’re the biggest cloud service vendor in the world.
As the leading e-commerce giant, Amazon has already developed tech that enables you to visualise how furniture for home décor would look in your space. With online commerce expected to peak in the metaverse, Amazon will have a huge influence in how users experience VR and AR.
Amazon also released a digital role player game titled ‘AWS Cloud Quest’. The game assists users in building cloud computing skills through navigating the online city. You can design your very own avatar, earn points by completing Amazon Web Service puzzles and customise your entire experience.
Amazon has a market cap of $1.7 trillion as well as nearly 150 million in Amazon Prime members – it augurs well for its future into the new age. Amazon stocks went up in the fourth quarter 2021, reporting revenue increase of 9% YoY to $137.4 billion. The Q4 numbers were boosted by the festive season and the investment that Amazon made in Prime to support fast delivery. The company estimates that revenue of $112 billion to $117 billion in the upcoming months.14
Apple is another company that already has a robust database of people that use its products, which gives it an edge over its competitors. With 1.8 billion of devices, including housing over 14,000 ARkit apps, venturing into the metaverse is only a matter of time.
To date, Apple has spent over $25 billion in research and development to create products for all its users. While the goal is for Apple’s products, both software and hardware, to fully integrate in the metaverse, reports are that they aren’t rushing into the arena.
In the fourth quarter of 2021, Apple recorded $83.4 billion in revenue, up 29% YoY. The performance was attributed to the launch of different products such as the iPhone 13 and M1-powered Macs.15
Autodesk is the go-to tool for engineers and architects alike when designing 3D buildings and model structures. The program that’s used is called Revit, which enables architects to visualise their creations in virtual reality. According to reports, approximately 70% of Autodesk’s business is attributed to its design software for architecture, engineering and construction.16
In Q4 2021, Autodesk posted revenue of $1.2 billion, only just surpassing Zacks Consensus Estimate by 1.5%.17 Zacks monitors brokerage ratings and analyses different equities to predict estimated earnings over a given period.
According to Autodesk’s CFO, Debbie Clifford, the great quarter was attributed to ‘robust renewal rates, strong growth in subscriptions and rapidly expanding digital sales.’18
The current forecast by analysts is that Autodesk’s revenue will be between as high as $1.5 billion in the upcoming quarter. It remains to be seen if the trend of beating EPS estimates will continue. In March 2022, Autodesk’s market cap was $48.8 billion.
How to trade in metaverse stocks
You can get exposure to Metaverse stocks by trading CFDs. With CFDs you speculate on the price of the underlying asset rising or falling – without taking ownership of any shares.
Since CFDs are leveraged derivatives, you can open a position with just a fraction of the full size of the trade. Not only will your profits be magnified, but you stand to lose more than your initial deposit. That’s why you always need to take steps to manage your risk.
In brief: what is the metaverse?
The metaverse is a virtual, collectively owned and shaped space (or internetwork of spaces) in which people can meet to socialise, attend virtual events like concerts, work and game. Whenever you hear of the term ‘metaverse’, it’s often used to describe the next envisioned iteration of the internet – closely aligned to the concept of Web 3.0.
It presents immense creative opportunity for the entrepreneurially minded as it’ll rely heavily on the creation and exchange of a wide variety of digital goods and services in a virtual economy. Moreover, the metaverse will require mass access to virtual and augmented reality technologies.
It’s a lot to take in, and the exact form of the metaverse is the subject of speculation. However, as a space that opens the doors to a new digital economy, in addition to the hardware to enable it, it could be worth over a trillion dollars a year in revenue in the coming years.19
A world first: the Ball Metaverse Index
As noted, we’ve selected our stocks based on their prominence in the ground-breaking Ball Metaverse Index.20 This index was formed to track emerging and established companies that develop technology to be used in the metaverse, including those that create hardware and software to support it.
Traders can keep an eye on the historical performance of the companies that they want to get exposure to via the index. It uses a tiered weight portfolio to classify different companies that are involved in a variety of sectors, such as computing, digital currencies and gaming, as well as hardware and wearables.
Ball Metaverse Index company classifications
|Companies enabling and supplying computing power to support the metaverse
|Companies providing real-time connections, high bandwidth and data services to consumers
|Companies developing immersive digital simulations, environments and worlds
|Companies building tools, protocols, formats, services, and engines that serve as standards for interoperability
|Companies supporting digital payment processes and operations
|Content, assets and identity services
|Companies designing and managing digital assets, such as virtual goods and currencies
|Companies supplying the physical technologies used to access, interact with, or develop the metaverse
The metaverse economy: NFTs and cryptocurrencies
Since the metaverse is a simulation of the real-world, there’s an economy in which goods and services are traded in the virtual world. This is where digital currencies, like crypto, enable users to buy assets like non-fungible tokens (NFTs) or virtual real estate.
With the metaverse ever-expanding, its evolution will take place in Web 3.0, where the marketplace won’t be centralised and users can create almost anything online, control it, then monetise it.
Much like the rush to owning cryptocurrencies when they first launched, companies and brands without much of a tech presence have mobilised to enter the arena.
For example, clothing giant Nike has created a virtual sneaker as well as a virtual world dubbed ‘Nikeland’ in pursuit of scalable consumer traffic for its products.
While most people assume the metaverse only involves online video gaming, many organisations such as the National Basketball Association (NBA), National Football League (NFL) and other sporting codes have adapted their offering into digital, immersive experience that mimics the physical world.
Metaverse stocks summed up
- The metaverse is a virtual world that simulates real-life on a digital plane. It involves tapping into virtual and augmented reality to imitate the physical world
- You can participate in the metaverse by playing online video games, creating your own items, buying or selling assets such as NFTs and buildings, and so much more
- You can get exposure to stocks of entities that are involved in the creation and make-up of the metaverse
- You can trade in metaverse stocks from a list of the best performing companies taken from the Ball Metaverse Index
- To trade metaverse stocks, you can open a CFD trading account and speculate on the price of the underlying asset rising or falling
1 Bloomberg, 2022
2 Money US News, 2022
3 Nvidia, 2022
4 Investor Place, 2022
5 The Motley Fool, 2022
6 The Motley Fool, 2022
7 Seeking Alpha, 2022
8 Bloomberg, 2022
9 Yahoo Finance, 2022
10 Snap, 2022
11 Nasdaq, 2022
12 Seeking Alpha, 2022
13 The Street, 2022
14 Fortune, 2022
15 Apple, 2022
16 Forbes, 2022
17 Nasdaq, 2022
18 Autodesk, 2022
19 Nasdaq, 2022
20 Roundhill Investments, 2022
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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