When you hear the term “Web 3.0 stocks,” cryptocurrency and non-fungible token (NFT) related plays may first come to mind. After all, it was blockchain technology-associated most with both these types of digital assets, that ushered in this new frontier of the internet.
Yet the decentralization that’s the key element of Web 3.0 isn’t limited just to the world of cryptos and NFTs. Decentralized finance (DeFi) is but one application for this technology. Blockchain-based decentralization brings with it greater control for users of their privacy.
If this plays out, it could be a massive reversal of internet trends over the last few decades, where “big tech” giants have considerable control over user data. Not to mention, the ability to control who gets to use their increasingly indispensable platforms. However, that’s not to say big tech stands to “lose out” if skeptics like Elon Musk are wrong, and this isn’t just a flash-in-the-pan fad.
Many of the largest tech companies stand to benefit greatly from this next generation of the world wide web. So, what are the Web 3.0 stocks to buy now, especially as recent market volatility has knocked them to lower prices? Take a look at these seven, all of which have exposure to the rise of decentralization:
- Coinbase Global (NASDAQ:COIN)
- DatChat (NASDAQ:DATS)
- Microsoft (NASDAQ:MSFT)
- Cloudflare (NYSE:NET)
- Palantir Technologies (NYSE:PLTR)
- Take-Two Interactive (NASDAQ:TTWO)
- Unity Software (NYSE:U)
Web 3.0 Stocks: Coinbase Global (COIN)
With the big drop in cryptocurrency prices as the market moved to “risk-off,” shares in crypto-financial services giant Coinbase Global dropped by about 50% between November and January.
Since then, COIN stock has begun to bounce back, as investors tip-toe back in Bitcoin (BTC-USD), Ethereum (ETH-USD), and other major cryptos. Right now, it’s still unclear whether the “crypto winter” will end when the Northern Hemisphere winter ends in March.
Or, if rate hike worries, plus other factors like the Biden Administration’s forthcoming crypto-related Executive Order, will put more pressure on this asset class.
In short, a near-term recovery for Coinbase is up for debate. However, if you’re looking at it as a long-term Web 3.0, now may be the time to buy. For one, the current uncertainty over the future of crypto has knocked shares down to a reasonable valuation. Even if the sell-side is correct, and Coinbase’s earnings are set to drop during 2022, shares today sell for around 25.7x these estimates.
More importantly, the company has the potential to get back in growth mode, as its legacy exchange business has matured. Hiring thousands of new employees this year, ahead of emerging Web 3.0-related financial product opportunities, a rebound for COIN stock may not depend entirely on a full rebound for the coin/token market.
Last fall, only a few months after it went public, DatChat took off in price, as it briefly became a meme stock.
Given the early-stage company, which develops privacy-focused social media applications, has big exposure to the use of blockchain technology to product user privacy, it’s no surprise it saw a rapid rise in popularity.
Unfortunately, for investors who bought in when it peaked in price, its “hotness” proved to be fleeting. Very volatile during October, where it dipped, then rose sharply, due to rumors it was a short-squeeze candidate, since then this stock has experienced a tremendous drop in price.
As of this writing, it’s trading for around $2.10 per share, down nearly 89% from its all-time high. However, with its move down to penny stock levels, for investors looking for Web 3.0 stocks with big upside, this may be one to consider.
Its plans to purchase Avila Security will increase its exposure to this trend. The growing use of blockchain technology in the area of user privacy could mean big upside down the road. That said, with its high upside potential, comes with it high risk.
If it fails to ride the Web 3.0 trend to significantly higher sales, it’ll likely burn through its $25.8 million cash position, necessitating the need for future capital raises. This could result in more big declines for DATS stock. Tread carefully, but keep it on your watchlist.
On the surface, Web 3.0 sounds like its good news for internet users and bad news for big tech, but the truth may not be so cut-and-dry. Incumbent web properties, like those owned by Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) and Meta Platforms (NASDAQ:FB) will likely continue to thrive.
In addition, other large tech companies stand to profit from the rise of blockchain technology. For instance, Microsoft, which is pursuing opportunities in NFTs, along with another key area of the overall Web 3.0 trend: the Metaverse.
Of course, Facebook parent Meta Platforms is all-in on the metaverse. Alphabet and Apple (NASDAQ:AAPL) are trying to carve out a piece of this future market as well.
I point to MSFT stock in particular as the big tech Web 3.0 play because, compared to Apple, Alphabet, and Meta Platforms, its metaverse catalyst is more like a “nice to have,” rather than something it needs to move its needle once again.
In other words, with other tech trends like the rise of cloud computing, plus upping its exposure to video gaming, the downside risk of Web 3.0 fizzling out may be more limited with this stock than with other big tech plays.
Conversely, that does mean possibly limited upside from it as well. Nevertheless, if you are still skeptical about this trend, yet want some exposure to it, owning Microsoft shares may be the best way to do it.
Web 3.0 Stocks: Cloudflare (NET)
As with MSFT stock, Web 3.0 is a secondary catalyst when it comes to NET stock. However, if this trend plays out like those who are bullish on it expect it to play out it may be something that helps this hard-hit SaaS play get out of its recent slump.
As you likely know, Cloudflare ran hot during 2021. Between January and November of last year, the web security and content delivery software provider went from $75 to as much as $221.64 per share.
Yet with the rate-hike-fueled tech sell-off and growing concerns about its slowing revenue growth, the NET stock has since given back almost all of its gains.
In hindsight, however, NET’s fall could prove to be an overreaction in hindsight. As Louis Navellier has discussed, robust demand for content delivery network (CDN) and cybersecurity services means it’ll keep on delivering solid results.
Now, atop these two solid factors, is its exposure to Web 3.0. Cloudflare has a game plan to capitalize on this trend as well. Before the uncertainty around tech clears up, now may be time to buy it, as it finds a floor just under $100 per share.
Palantir Technologies (PLTR)
You may be wondering what data analytics software provider Palantir has to do with Web 3.0. While this isn’t a main area of focus for the company, it is making moves in this area. Namely, through its Foundry for Crypto offering, a software suite aimed at crypto exchanges, along with Web 3.0 startups.
Foundry for Crypto by itself may not help spark a comeback for hard-hit PLTR stock. It could indirectly help the company accomplish its goals, though. PLTR wants to pivot from being mainly a provider of services to the U.S. Federal Government to mainly a provider of commercial software.
Achieving this is key for the company. Although a lot of its price declines can be chalked up to the tech sell-off, investors are also concerned the company will not be able to sustain above-average levels of revenue growth. Even as it continues to do so, as seen in its latest quarterly earnings release.
I stand behind my view that PLTR stock could keep on facing challenges in the short term. Yet, with its drop to around $10.40 per share, further downside may be moderate. now may be a great entry point for shares for those bullish on its long-term prospects.
Take-Two Interactive (TTWO)
Mostly, it’s enabling the company to become a more dominant force in the world of mobile games. There are also cost savings and other pluses from combining the two video game makers.
Yet the Zynga deal brings something else to the table. As InvestorPlace’s William White reported, the mobile game maker is at work developing an NFT game.
Granted, this is just a small portion of what Take-Two is paying $12.7 billion to get its hands on. Still, if this initial game proves to be a hit, the company could ramp-up its efforts in this area. In short, consider this Web 3.0 catalyst to be a sort of “cherry on top” for this transaction.
Sliding again, after partially rebounding from its post-merger news sell-off, now may be a great time to dive into it. Its exposure to this trend may not be something that drives a full recovery for TTWO stock.
TTWO has fallen from more than $200 per share in early 2021, to around $157 per share today. Yet along with the other benefits from the Zynga purchase, it could lend a hand in doing so.
Web 3.0 Stocks: Unity Software (U)
Surging higher in mid-2021, the emergence of the metaverse trend last October resulted in a parabolic move for shares in Unity Software.
The company provides software used to create 3D content. They facilitate the creation of augmented reality (AR) and virtual reality (VR). The rise of Web 3.0 trends like the metaverse bode well for it. But much like other plays that zoomed to “meta mania,” it has crashed back to earth.
At around $94 per share, it’s down by more than 50% from its highs. Much like some of the other “hot stocks” mentioned above, it may be a while before the market fully absorbs upcoming increases to interest rates and fully warms back up to richly-priced tech stocks.
With a market capitalization of around $29 billion, against projections of around $1.5 billion in sales this year, it may have more room to fall before it’s truly bottomed out. Then again, despite its still-high valuation, waiting for an even lower price before buying may result in you missing the chance before it takes off again.
Given its most recent guidance update, which topped existing 2022 estimates, better-than-expected results this year could mean U stock could bounce much sooner than you think. If you’re looking for Web 3.0 stocks, keep an eye on it.
On the date of publication, Thomas Niel held LONG positions in Bitcoin and Ethereum. He did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.