In today’s frothy markets, investors bullish on the future of the Metaverse are looking at undervalued Metaverse stocks for long-term returns. Often touted as the internet’s next big thing, the Metaverse is defined as a three dimensional world offering investors and innovators numerous opportunities.
A virtual world is still a new concept for many but this hasn’t stopped tech companies from pushing boundaries in the realm. As with innovations in the past, there is a special focus on the consumer and retail impact of this new technology. An immersive world shows promise of new ways of shopping, gaming and interacting with your peers. However, as this internet revolution plows on, we are likely to see the Metaverse impact everyday facets of our life as well.
Nonetheless, a fully immersive world is unlikely to become a reality for at least a decade. But if you’re willing to bank on its potential, there’s no better time to get behind the top names in the sector.
Meta Platforms (META)
Formerly known as Facebook, the company’s new name, Meta Platforms (NASDAQ:META), signals a strong shift in its priorities. While ads on Facebook continue to be the primary revenue generator, Meta’s Reality Labs business is making big investments in its augmented and virtual reality (VR) technology.
The tech giant has several products in its pipeline including ambitions to create an AGI or artificial general intelligence model that can manage product work. According to CEO Mark Zuckerberg, the model will have the ability to reason, plan and code along with several other cognitive skills.
Meta is all in on the future of the Metaverse, investing billions of dollars in its virtual reality platforms. And, while the technology shows promise in the long-haul, Reality Labs continues to lose money- posting a $3.85 billion loss in Q1. This comes as a result of the heavy investment costs of VR technology that still largely remains a fledgling.
However, for investors looking to get in on undervalued Metaverse stocks, Meta’s current value presents a great entry point into the market.
Cloudflare (NET)
There’s companies out there making major breakthroughs in the Metaverse and then there’s those that provide the tools to make these immersive experiences a reality. One such company is Cloudflare (NYSE:NET) and its Content Delivery Network (CDN) solution.
At its core, the CDN creates multiple copies of a website and distributes it across servers. When a user requests a web page, the CDN retrieves it from the nearest server- resulting in speedy data transmission.
This technology will take center stage in the evolution of Web 3.0 and its growth will only be amplified by the Metaverse. A report by PR Newswire predicts that the value of the CDN market will double to $24 billion by 2030. And CloudFlare being at the forefront of this sector- has plenty to gain from this trend.
More recently, the company doubled down on its cloud networking efforts with the launch of the Magic Cloud Networking. This multi-cloud networking system designed for a VR era will enable companies to manage multiple clouds with ease. It aims to reduce dependency on the IT and Development teams while seamlessly integrating multiple networks.
Cloudflare’s Q1 report showed strong sales growth and optimistic Q2 revenue guidance. However, shares plunged 41% after the company kept its current revenue outlook amidst poor macroeconomic conditions.
Investors eager to get in on the cloud computing momentum, will find the current price a great entry point into one of the top undervalued Metaverse stocks on the market.
Shopify (SHOP)
Shopify (NYSE:SHOP) has big dreams to change the future of shopping. The e-commerce giant is betting big on an augmented reality (AR)/VR world with several investments in the space.
Earlier this year, the company launched a new feature that enables retailers on its platform to launch augmented reality versions of their product. Retailers who used the AR option reported a 94% conversion rate.
In an effort to further the expansion of its brand in a Metaverse era, the company acquired the app Primer that allows users to see their home design purchases in a virtual world. The partnership with the AR app will support Shopify’s vision to create a virtual shopping experience.
And finally, Shopify launched its own NFT platform where users can buy and sell digital art. Unlike traditional NFT marketplaces, payments aren’t just limited to cryptocurrencies but can also be made on the Shopify platform via debit or credit cards.
Looking at the current share price, there’s no better time to get in on SHOP stock. The company has seen tremendous growth in the past year and with its unique position in the market- analysts predict even greater upside. Shares of the company plunged 19% after a weak earnings report this month but the dip presents a great buying opportunity for undervalued Metaverse stocks like this one.
On the date of publication, Divya Premkumar 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.
