After losing billions, the metaverse – and metaverse stocks — are coming back strong.
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, as I noted just a few days ago.
In addition, Hugo Boss (OTCMKTS:BOSSY) is heading to the metaverse with Roblox (NYSE:RBLX) to market to Generation Z. Nike (NYSE:NKE) is working with Roblox with its virtual world, Nike Land.
Adidas (OTCMKTS:ADDYY) is working with Roblox, too. According to RetailDive.com, “Through its partnership with Roblox, Adidas is aiming to connect with new customers and reconnect with existing fans of the brand in the digital realm. Adidas joins a growing list of brands extending their reach to Roblox players, including Walmart (NYSE:WMT), PacSun, and Claire’s.”
Even U.S. manufacturing firms are moving to the metaverse, says Coin Telegraph. The World Economic Forum, for example, just said 92% of U.S. manufacturing executives are exploring various ways of implementing the metaverse into their own firms.
That being said, investors may want to jump into metaverse stocks, such as:
Roblox Corp. (RBLX)
One of the top metaverse stocks to buy and hold long term is Roblox. Since October, RBLX exploded from a low of about $26 to a high of $47.11. Unfortunately, it did fail at triple-top resistance dating back to July. But I’d look to buy the weakness once RBLX finds its next line of support, which may be around $33.90.
Still, there’s plenty to get excited about with Roblox. For one, it’s working with a growing number of companies, like Nike and Adidas.
Two, earnings have been solid. While 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 were up 25% year over year to $1.13 billion.
And three, Barclays upgraded RBLX to an equal weight rating, noting “RBLX’s execution has become much steadier since mid-2023. The longer-term framework of 20% bookings CAGR and 20% DITBA margin, with advertising entering the fray at some point, looks attractive,” as quoted by Seeking Alpha.
Unity Software (U)
We can also look at Unity Software (NYSE:U), which just found support again under $27. From here, with Unity stuck in a channel between $26.07 and $40, I’d like to see it bounce back to the upper band around $40 again soon.
And, as I noted just last week, “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.’”
In addition, analysts at Piper Sandler just upgraded Unity to a neutral rating, with a $30 price target. “Piper entered 2024 with concerns that investor sentiment and the valuation on U were too optimistic relative to a strategic portfolio overhaul, and the 30% Q4 surge in U share price,” noted Piper Sandler analyst Brent Bracelin.
RoundHill Ball Metaverse ETF (METV)
I’d also use the recent pullback in Roundhill Ball Metaverse ETF (NYSEARCA:METV), as an opportunity. Since bottoming out in October, the METV ETF ran from a low of about $9 to a recent high of $12.87. From here, if the metaverse boom can get explosive again, I’d like to see the METV ETF run back to its all-time high of about $17.
With an expense ratio of 0.59%, the ETF is the world’s largest metaverse fund and should benefit from two key areas of growth. As I noted last week, that includes “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.”
In a strong uptrend, the METV ETF is well worth an investment for the long haul. It’s probably the best of the best of the related metaverse ETFs, I believe.
On the date of publication, Ian Cooper did not hold (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.
