Investors are always looking to tap into lucrative long-term market opportunities to build wealth over time. Perhaps one of the most exciting trends has been the metaverse, which catapulted to fame following Facebook’s much-talked-about name change to Meta in late 2021. Following the announcement, the investing world started scouting the market for some of the best metaverse stocks to buy.
However, the metaverse has had a bad rep over the past couple of years for being a cash-burning endeavor. Meta Platforms has burned through billions in advancing the project and is likely to slow down the pace of its investments in its “Year of Efficiency.” Nevertheless, the industry is poised for colossal gains, and tapping into the trend early should pay dividends over the long term. That being said, here are some of the best metaverse stocks to consider now.
|THNQ||ROBO Global Artificial Intelligence ETF||$30.86|
One of the best metaverse stocks to buy is Nvidia (NASDAQ:NVDA), a no-brainer investment in the niche. Over the years, the company has risen to prominence for its cutting-edge GPUs that ushered in a digital revolution across multiple industries. Furthermore, its metaverse platform, called the Omniverse, was selected by Time magazine in 2021 as one of the best inventions. It enables 3D virtual worlds, allowing companies to create digital twins to optimize systems effectively for better productivity. The company CEO Jensen Huang argues that the platform can save billions of dollars for companies. It already boasts a customer base of over 700 users, which will continue to grow over time, in line with the growth in the sector.
Autodesk (NASDAQ:ADSK) is a leading software supplier in engineering and construction, gaining immense popularity for its flagship building-information-modeling solution, Revit. The software effectively empowers users to develop visual representations of models, structures, and schematics. Moreover, by adding Autodesk plugins such as rendering, users can produce metaverse-like 3D content.
The firm’s operating performance has been incredible in recent years. It boasts awesome gross margins exceeding 90% over the past five years. Moreover, with its entire software suite available as a software-as-a-service, the firm has built a massive cash flow base, with levered free cash flow growth of over 57% in the past five years. As we advance, it will continue to grow aggressively, remaining unchallenged in its niche.
Matterport (NASDAQ:MTTR) is transforming environmental interaction and data usage. Its robust technology acquires and manipulates spatial details, developing accurate 3D depictions of actual surroundings. Moreover, its models have diverse applications, including immersive metaverse-like encounters, inventive architectural design, strategic construction management, and others.
Its business has grown healthy each quarter as it remains in hyper-growth mode. Revenue growth for its most recent fourth quarter came in at $41.1 million, a 52% increase from the prior-year period. Moreover, subscribers increased to a whopping 701,000, up 39% from last year’s period, with a 17% bump in subscription sales. Additionally, its spaces under management increased by 37% year-over-year to an incredible 9.2 million. Though its growth rates have been mighty impressive, its profitability metrics are in the red, making it a risky investment. However, growth at scale could potentially narrow down its losses, lifting it from penny stock territory.
Unity Software (U)
Unity Software (NYSE:U) should be on any best metaverse stocks to buy list. After all, its platform commands over 60% of the video game engine market, offering various tools and features for monetization, sound, design, and other related assets.
Though its claim to fame is in the 3D content creation realm, it has expanded its use cases for other tech verticals, making it a key player in the metaverse. It formed strategic partnerships and acquired smaller businesses to build a cutting-edge metaverse stack to develop virtual platforms that incorporate technologies such as datafication, artificial intelligence, intelligent photogrammetry, virtual reality, and others. The software stack could have a massive impact on all the metaverse players supporting the foundation of these applications.
ROBO Global Artificial Intelligence ETF (THNQ)
Perhaps one of the best low-risk ways to play an up-and-coming trend like the metaverse is through an exchange-traded fund (ETF). Arguably one of the top ETFs in the AI and metaverse sector is the ROBO Global Artificial Intelligence ETF (NYSEARCA:THNQ).
With an expense ratio of 0.7%, the THNQ ETF offers exposure to a myriad of popular stocks in the metaverse and AI sectors. Many of its holdings are discussed in the article, and others are making serious inroads in the metaverse. ETFs of its kind were trading in the red in 2022, but THNQ stock has been down significantly better than its peers, generating around 22% return in the past six months.
Meta Platforms (NASDAQ:META) has led the charge for the metaverse project investing billions into commercializing what could be a billion-dollar industry. Reality Labs, its metaverse reporting segment, posted a loss of $4.28 billion last year on sales of $727 million. Hence, nothing fruitful has come of it thus far, but given Meta’s strong track record, expect big things in the future.
Fortunately for Meta’s stockholders, the company is looking towards belt-tightening measures in what it deems as a year to maximize efficiencies. Additionally, it will be looking to explore new opportunities in AI that could potentially become a cash cow. Moreover, Meta could use the additional revenues to finance its metaverse project, which remains integral to its future growth strategy.
Roblox (NYSE:RBLX) is a gaming metaverse where users can develop, explore, and socialize in a limitless 3D world. Its primary objective is to build a human co-experience platform enabling billions of users to play, learn, explore, and communicate with each other.
The platform witnessed immense growth during the pandemic years before growth rates normalized and then some in the past year. However, its December quarter shows its back to producing goods for its investors. Bookings, a key indicator of future sales, shot up $899.4 million, significantly above analyst expectations of $881.4 million.
Additionally, the firm posted 48 cents per share loss, much better than estimates for a loss of 52 cents. Moreover, users spent over 12.8 billion hours engaged on the platform during the fourth quarter, up 18% from the same quarter last year.