- Despite setbacks growth shares have seen in recent weeks, these metaverse stocks are poised to create shareholder value in future quarters.
- Sony (SONY): The $1 billion investment in Epic Games could see large returns as gaming embraces the metaverse.
- Unity (U): Recently announced partnerships with big names in advertising and entertainment could provide a significant growth runway ahead.
- Synaptics (SYNA): New innovations and a new research facility in France are likely to pay off in the long run.
Metaverse stocks, our topic of the day, have suffered in 2022. The Roundhill Ball Metaverse ETF (NYSE:METV) has fallen nearly 46% year-to-date (YTD). Yet this new sector had generated an incredible amount of excitement in 2021, in part thanks to the stay at home days of the pandemic.
Research from Fortune Business Insights highlights, “The global metaverse market size was valued at USD 63.83 billion in 2021. The market is projected to grow from USD 100.27 billion in 2022 to USD 1,527.55 billion by 2029, exhibiting a CAGR of 47.6% during the forecast period.”
Despite recent setbacks in share prices, the metaverse market continues to grow at an accelerated pace. Thus, metaverse stocks are likely to see a rebound as more companies invest heavily in a future powered by the this new technology network.
With that in mind, here are 3 of the best metaverse stocks to buy in May.
Our first metaverse pick for today is the technology behemoth Sony (NYSE:SONY). Its interests include electronics, gaming, music and movies. Sony Entertainment has top rankings as both a music label and a film studio. Meanwhile, Sony Interactive Entertainment oversees the PlayStation universe.
In February, Sony released Q3 FY21 results. Revenue was $23.3 billion, up 13% year-over-year (YOY). Net income was $2.66 billion, compared to $2.39 billion the year before. Diluted EPS was $2.13, compared to $1.91 last year.
Recently, Sony announced it was making a $1 billion strategic investment in the privately-held Epic Games, the creator of the Unreal video game engine and Fortnite. This move could be be Sony’s full-fledged entry into the metaverse through gaming.
SONY stock is down 37% for the year and currently supports a dividend yield of 0.5%. Shares are trading at 15 times forward earnings and 1.4 times sales. Meanwhile, the 12-month median forecast stands at $138.41.
Next up on our list is the gaming software development company Unity Technologies (NYSE:U). Its flagship product is the Unity game engine, initially launched in 2005 exclusively for Mac OS used in Apple (NASDAQ:AAPL) products. But since its inception, the Unity engine has grown significantly and is now utilized in a variety of console, computer, mobile and virtual reality (VR) platforms.
The company announced Q4 FY21 results in February. Revenue totaled $316 million, up 43% from the previous year. Net loss for the quarter came in at $12 million, compared to a net loss of $20 million the year before. Diluted net loss per share was 5 cents, compared to 10 cents the previous year.
Recently, Unity has announced a number of new partnerships. For instance, a partnership with Insomniac Events promises to bring music and dance festivals into the virtual realm. Additionally, a partnership with Meta Platforms (NASDAQ:FB) was formed to bring the Meta Audience Network to Unity Mediation, an in-app advertising bidder.
Despite these positive moves, Unity stock is down 79% YTD. Compared to 2021, shares now offer better value at 16 times trailing sales. Meanwhile, the 12-month median forecast is $100.
The final metaverse stock on our list is Synaptics (NASDAQ:SYNA). It develops human interface hardware and software. Their products include mobile phone touch screens, touchpads, fingerprint scanners, integrated chips and artificial intelligence (AI) evaluation kits.
Synaptics released its Q2 FY22 report in February. Revenue came in at $421 million, compared to $358 million the previous year. Net income was $70 million, up from $50 million the year before. Diluted EPS increased to $1.71 from $1.36.
Last month, the company announced the Katana Edge AI evaluation kit, software created to test new AI programs. Additionally, Synaptics recently announced a new research and development center in France. This center will focus on emerging Wi-Fi and Bluetooth technologies powering the internet of things (IoT).
SYNA stock is down 52% for the YTD, but up 14% for the past 12 months. Shares are trading at 11 times forward earnings and 4.5 times sales. Finally, the 12-month median forecast stands at $227.50.
On the date of publication, Tezcan Gecgil 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.