Investors may not want to write metaverse stocks off just yet.
According to Market.us, the market could be worth about $2.3 trillion by 2032. All thanks to advancements in virtual reality, augmented reality, and the potential for millions to immerse themselves in virtual environments. Helping, there are about a billion active users in the metaverse at the moment, which could double by 2025.
Plus, consider this. “Gaming remains the dominant sector in the Metaverse, accounting for over 60% of total market revenue. The average Metaverse user spends over 15 hours per week in virtual environments, with spending on virtual goods and services exceeding $1,000 per year,” says Market.us. Even “the healthcare sector is utilizing the Metaverse for telemedicine, virtual therapy sessions and medical training simulations, improving access to healthcare services and training.”
And that’s just the start. With growing interest, investors may want to pay close attention to top metaverse stocks, such as:
Roblox (RBLX)
One of the top metaverse stocks to own is Roblox (NYSE:RBLX).
Over the last few months, it ran from about $26 to about $46, where it failed at double-top. Now consolidating around $40, I’d like to see it challenge prior resistance again.
Most recently, the company posted a fourth-quarter loss of 52 cents, which was narrower than the expected 55 cents. Revenues of $750 million were up 30% year over year. Bookings — which measure sales of virtual currency — jumped 25% year over year to $1.13 billion.
Moving forward, RBLX expects for bookings to come in between $910 million and $940 million, which is also better than forecasts for $902.7 million. And for the full year, it sees bookings in the range of $4.14 billion and $4.28 billion, which is above estimates for $4.098 billion.
Better, Benchmark analysts, who have a buy rating on RBLX, say, “The company has set ambitious financial targets, aiming for over 20% annual growth in its top line through at least 2027, alongside targeting an annual margin expansion of 100 to 300 basis points by managing the growth of its fixed costs,” as quoted by Barron’s.
Unity Software (U)
Unity Software (NYSE:U) is another interesting metaverse stock to buy. Since late 2022, the stock has been stuck in a channel between $26 and $45. Now, for the eighth time, the stock appears ready to bounce from the lower range of the channel, with another potential test of $45 ahead. Until it breaks below $26 or above $45, it’s likely to stay within that range for a bit.
Most recently, the stock did pull back on earnings and guidance.
While revenues of $609 million were far better than expectations for $560.45 million, an EPS loss of 66 cents was below estimates for a loss of 45 cents.
Moving forward, “Unity expects first-quarter revenue to be between $415M and $420M, well below the consensus of $536M. Full-year sales are forecast to be between $1.76B and $1.8B, which is below the consensus of $2.32B,” says Seeking Alpha.
Fortunately, Piper Sandler analyst Brent Bracelin just upgraded the Unity stock to a neutral rating. He noted, “The strategic portfolio overhaul is a welcome sign and yields a few reasons to be a bit more optimistic on an improved margin profile with a leaner model shifting away from hardware and a potential rule of 40 model when the dust settles at the end of 2024.”
Roundhill Ball Metaverse ETF (METV)
Or, if you’d rather diversify your metaverse holdings at a low cost, there’s the Roundhill Ball Metaverse ETF (NYSEARCA:METV).
With an expense ratio of 0.59%, the ETF is the world’s largest metaverse fund holds Nvidia (NVDA), Meta Platforms (META), Roblox, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Qualcomm (NASDAQ:QCOM) to name a few.
According to Roundhill Investments, the ETF could benefit from two key areas of growth.
One “The Metaverse’s economic reach is anticipated to hit an impressive $10.7 trillion by 2033, signaling an era of unprecedented expansion.” Two, “VR/AR headset shipments are forecasted to reach 31.1 million by 2026, indicating steady industry growth and market traction.” Both could help fuel a significant upside for the METV ETF.
Plus, consider this. According to the METV investor deck, a McKinsey report states the impact potential for the metaverse, by 2030, could reach $4 trillion to $5 trillion. In addition, Morgan Stanley estimates that the metaverse — just in the U.S. and in China —could be a $16.3 trillion opportunity.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
