In this piece, we will take a look at the 10 metaverse stocks that you can consider investing in.
The advent of technology has created new industries and transformed our daily lives in a previously unthought manner. The transistor, which represents the basic block of computing, has been shrunk to microscopic dimensions, resulting in a vast growth of computing power that has enabled new technologies to take root. Additionally, advances in manufacturing technology have enabled companies to design, build, and produce gadgets that would seem like science fiction to humans living just a century ago.
Two such technologies are augmented and virtual realities, both of which serve to expand the way an ordinary user can interact with others and with technology products. Some use cases for AR and VR include video games and simulations, with both allowing users to immerse themselves in a virtual technological environment.
The Metaverse Industry
Another use case for AR and VR headsets is what is dubbed as a metaverse. A metaverse, for the uninitiated, is a three-dimensional virtual online environment that allows users to ‘enter’ a fully virtual social network to ‘live’ their lives in it. Derived from a combination of ‘meta’ and universe’, a metaverse also includes virtual interaction with physical objects and digital transactions.
Despite being only recently popularized, the metaverse industry is believed to be on a strong growth trajectory by several research firms. For instance, a recent report from Reports and Data outlined that the metaverse industry is set to grow at a compound annual growth rate (CAGR) of 44.1% between 2021 and 2028 to stand at a whopping $872 billion at the end of the forecast period. Another report, this time from Brandessence Market Research, outlined a similar CAGR of 44.8% to project a value of $596 billion by the end of 2027.
Owing to these optimistic projections and its nascent nature, large and small players in the broader technology space have their eyes set on the metaverse industry. Some of the big players that are developing products to either allow users the metaverse experience or create products that enable the vast amount of computing power required to create the virtual extension of physical reality are NVIDIA Corporation (NASDAQ:NVDA), Meta Platforms, Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT).
Photo by David Dvořáček on Unsplash
Our Methodology
In order to determine which companies are hot in the metaverse sphere, we took a broad view of the enabling technologies required to fuel the sector. Once these companies were identified, we then analyzed them by taking a look at their earnings reports, investor letters, analyst coverage and hedge fund sentiment generated by Insider Monkey’s survey of 867 funds. The firms are ranked according to their hedge fund sentiment when available.
10 Metaverse Stocks to Invest In
10. Tencent Holdings Limited (OTC:TCEHY)
Number of Hedge Fund Holders: N/A
Tencent Holdings Limited (OTC:TCEHY) is a Chinese conglomerate that is described by many as one of the largest gaming companies in the world. It owns several gaming brands such as Epic Games, which has shot to fame due to its Fortnite application. Epic’s management has also hinted at developing virtual platforms for social events that would place users in a metaverse.
Tencent Holdings Limited (OTC:TCEHY) raked in RMB142 billion in revenue and RMB31.75 in net income for its fiscal fourth quarter, missing analyst estimates for both. Barclays set an $84 price target for the company in November 2021, outlining that Tencent Holdings Limited (OTC:TCEHY) will play a crucial part in China’s attempts to make its own internet.
Tencent Holdings Limited (OTC:TCEHY) is also targeting the metaverse industry, just like Meta Platforms, Inc. (NASDAQ:FB), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
Tencent Holdings Limited (OTC:TCEHY)’s largest investor is Prosux PRX who owns a 29% stake in the company. As of December 23, 2021, the company’s market capitalization stood at HK$ 4.4 trillion.
9. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Holders: 36
Unity Software Inc. (NYSE:U) is a company placed right at the heart of the metaverse, at least when it comes to enterprise and professional use. This is through its 3D platform that unites different application platforms to allow application developers to create only a single application and then make sure it is operable on a host of consumer electronics devices such as smartphones and computers.
In its third fiscal quarter, Unity Software Inc. (NYSE:U) earned $286 million in revenue and -$0.06 in non-GAAP EPS pleasing Wall Street by beating estimates for both. The company’s price target was increased to $185 from $160 in November 2021 by Credit Suisse, who shared strong optimism for its technologies.
During Q3 2021, 36 of the 867 hedge funds part of Insider Monkey’s survey held the company’s shares. As of December 23, 2021, Unity Software Inc. (NYSE:U) had a market capitalization of $42.4 billion.
Unity Software Inc. (NYSE:U)’s largest investor is Jim Davidson, Dave Roux, and Glenn Hutchins’s Silver Lake Partners. This is due to it owning 40 million shares worth $5 million.
8. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Holders: 50
Roblox Corporation (NYSE:RBLX) is another software company that provides a metaverse environment. The company is headquartered in California, United States and it develops both an application, Roblox Client, to allow users the metaverse experience, and a toolkit, Roblox Studio, to enable developers to create applications for the Client.
As its third fiscal quarter came to an end, Roblox Corporation (NYSE:RBLX) had earned $509 million in revenue and -$0.13 in GAAP EPS for its Q3, beating EPS analyst estimates for both. Needham set a $136 price target for the company in December 2021, outlining that despite the pandemic-induced growth in the gaming sector, Roblox Corporation’s (NYSE:RBLX) best days are yet to come.
Out of the 867 hedge funds Insider Monkey surveyed by Insider Monkey in Q3 2021, 50 had holdings in the company. Roblox Corporation’s (NYSE:RBLX) market capitalization at the close of trading on December 23, 2021, stood at $58.9 billion.
Roblox Corporation’s (NYSE:RBLX) biggest shareholder is Chase Coleman and Feroz Dewan’s Tiger Global Management LLC. It holds 17 million shares worth $1.3 billion.
Roblox Corporation (NYSE:RBLX) was mentioned by Jefferies Group in its Q3 2021 investor letter. The letter outlined:
“If we look at the Metaverse concept with more lenient guidelines for interoperability, then it becomes easier to see why certain companies are being referred to as Metaverse. On the virtual side, we’d point to companies like Epic Games, TakeTwo and Roblox. In augmented reality, it would be Niantic and SNAP. These are the large capitalized players in the space but albeit, not the only ones. We expect new mulit-billion dollar companies will rise as the
Metaverse becomes more mature.Roblox is a good example. The content is almost entirely user generated, the engine that powers the developer studio is provided by Roblox and developers/creators share in almost all the money that users spend on the platform. In addition, many of the items that you purchase in the avatar marketplace, or even a branded experience like Vans World, can be taken across experiences. Roblox talks a lot about platform extension, which would move the platform beyond just gaming/leisure experiences and into education and workplace offerings. The developer community has the capability to build tools for other developers, there are professional studios being built on the platform and many consumer-facing brands/content are partnering with Roblox to ensure a virtual presence. Roblox actually has a lot of the pieces for our utopian definition of Metaverse, but things like technology, interoperability with outside platforms and a dynamic, two-way economy are what’s missing. However, given our thesis that full interoperability is somewhat unrealistic, it’s easy to see how Roblox fits the definition…” (Click here to see the full text)
7. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Holders: 54
Autodesk, Inc. (NASDAQ:ADSK) is one of the world’s most renowned software providers. It develops and sells 3D simulation software and other offerings to professionals working in several industries. Autodesk, Inc. (NASDAQ:ADSK)’s platforms allow the creation of detailed and complex virtual 3D structures and objects, which make it suitable to provide the tools to build a metaverse.
At the end of the third quarter of 2021, 54 out of 867 hedge funds part of Insider Monkey’s survey held Autodesk, Inc. (NASDAQ:ADSK) shares.
Autodesk, Inc. (NASDAQ:ADSK) earned $1 billion in revenue and $1.33 in non-GAAP EPS for its third fiscal quarter, beating analyst estimates for both. The company’s price target was lowered to $330 from $370 by Deutsche Bank in November 2021, due to weak guidance and supply chain constraints.
Autodesk, Inc. (NASDAQ:ADSK)’s largest investor is William Von Mueffling’s Cantillon Capital Management who owns a $341 million stake through 1 million shares.
Polen Capital mentioned Autodesk, Inc. (NASDAQ:ADSK) in its Q3 2021 investor letter outlining that:
“Shares of Autodesk have lagged recently due to expectations of short-term headwinds to free cash flow as the company transitions its billing structure to annual payments from multi-year up-front subscription payments. We view this as a transient issue and believe Autodesk’s attractive long-term growth profile remains in place.”
6. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 67
QUALCOMM Incorporated (NASDAQ:QCOM) is an American technology firm that designs semiconductors for use in a wide variety of gadgets such as notebooks, smartphones, and Internet of Things (IoT) devices. When it comes to the metaverse, the company aims to be at the center of the digital universe by powering devices that allow users to enter the 3D environment. QUALCOMM Incorporated (NASDAQ:QCOM)’s semiconductor products, such as Snapdragon chipsets, run hardware like the Oculus Quest 2 virtual reality headset that is essential to access the metaverse.
QUALCOMM Incorporated (NASDAQ:QCOM) earned $9 billion in revenue and a non-GAAP EPS of $2.55 in its fiscal Q4, beating analyst estimates for both. Mizuho raised the company’s price target to $195 from $170 in November 2021, stating that the rollout of fifth-generation (5G) cellular technologies spells a positive catalyst for the company.
Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 67 held a stake in the company whose market capitalization stood at $204 billion as of December 23, 2021.
Jim Simons’ Renaissance Technologies is QUALCOMM Incorporated (NASDAQ:QCOM)’s largest investor through a $462 million stake via 3.8 million shares according to Insider Monkey’s research.
Alger mentioned QUALCOMM Incorporated (NASDAQ:QCOM) in its Q1 2021 investor letter, which outlined that:
“Long position Qualcomm Inc. were among the top detractors from performance. Qualcomm is a leading semiconductor company with strong positions in telecommunications end markets that position the company as a primary beneficiary of the innovative 5G network standard roll out. Qualcomm is acknowledged as having the best technology specs for 5G chip sets as evidenced by signing up all 75 major OEMs including Apple. Additionally, beyond handsets, Qualcomm has meaningful growth drivers, including the Internet of Things, automobiles, industrials and gaming that provide the company with potential for generating increased earnings.
While Qualcomm was a notable positive contributor to the portfolio’s absolute and relative returns in 2020, during the first quarter, the share price declined and the position detracted from performance. Market demand for chips has been strong; however, Qualcomm hasn’t been able to fully exploit the demand as it is capacity constrained. Expectations were high for Qualcomm and while the quarter generally exceeded consensus estimates and forward estimates did rise, the street was anticipating a stronger positive surprise. We believe the production capacity constraints should abate in the second half of this year.”
Just like Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:FB), and NVIDIA Corporation (NASDAQ:NVDA), QUALCOMM Incorporated (NASDAQ:QCOM) is a key player in the metaverse industry.
5. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 83
NVIDIA Corporation (NASDAQ:NVDA) is the world’s leading designer of graphics processing units (GPUs). These are computing products responsible for rendering and visualizing virtual applications such as video games and other software. The company has dabbled in the metaverse software industry, by offering the NVIDIA Omniverse, which is a platform that allows companies to virtually simulate production and other environments. Additionally, its GPUs power the metaverse, as they are responsible for creating immersive virtual experiences.
In its fiscal Q3, NVIDIA Corporation (NASDAQ:NVDA) brought in $7 billion in revenue and $1.17 in non-GAAP EPS, beating analyst estimates for both. Tigress Financial raised the company’s price target to $400 from $230 in December 20221, outlining that the meta and omniverses hold strong potential for NVIDIA Corporation (NASDAQ:NVDA).
Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 83 had owned NVIDIA Corporation (NASDAQ:NVDA) shares. The company’s market capitalization stood at $741 billion as trading ended on December 23rd, 2021. Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 83 owned the company’s shares.
NVIDIA Corporation (NASDAQ:NVDA)’s largest investor is Rajiv Jain’s GQG Partners who owns 15 million shares worth $3 billion.
Vulcan Value Partners mentioned NVIDIA Corporation (NASDAQ:NVDA) in its Q1 2021 investor letterer. It outlined that:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 120
Apple Inc. (NASDAQ:AAPL) is the world’s most valuable company that shot to fame and riches through the iconic iPhone. While it does not directly dabble in metaverses, and we’re unlikely to find out its plans given its highly secretive nature, Apple Inc. (NASDAQ:AAPL) has all the tools at its disposal to make a splash in the industry. These include experience with content, human interaction, its own developer tools, and management interest.
Apple Inc. (NASDAQ:AAPL) brought in $83 billion in revenue and $1.24 in GAAP EPS for its fiscal Q3, meeting analyst estimates for EPS but missing those for revenue. Wells Fargo kept its $165 price target for the company in a November 2021 analyst note sharing optimism for iPhone sales in China on the back of a demand increase for smartphones in the country.
Apple Inc. (NASDAQ:AAPL)’s largest shareholder is Warren Buffett’s Berkshire Hathaway who owns 887 million shares worth $125 billion.
An Insider Monkey analysis of 867 hedge fund holdings in Q3 2021 revealed that 120 owned the company’s shares. Apple Inc. (NASDAQ:AAPL)’s market capitalization stood at $2.8 trillion as trading closed on December 23rd, 2021.
ClearBridge Investments mentioned Apple Inc. (NASDAQ:AAPL) in its Q1 2021 investor letter. It stated that:
“As we actively manage holdings and position sizes, we look to regularly recycle capital into more compelling opportunities. Maintaining our valuation discipline, we sharply reduced our position in Apple, whose shares more than doubled following our initial purchase in mid-2019 with an earnings multiple rising from the low-to-mid teens to nearly 30x.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Number of hedge fund holders: 243
Amazon.com, Inc. (NASDAQ:AMZN) is well known for its electronic commerce platform Amazon, which connects merchants all over the world to consumers. This platform also primes the company as a key player in the metaverse sphere, as it can allow its customers to virtually browse product catalogs, through AR product displays which is something that it has already experimented with.
For its fiscal Q3, Amazon.com, Inc. (NASDAQ:AMZN) brought in $110 billion in revenue and $6.12 in GAAP EPS as it missed analyst estimates for both. Cowen increased its price target to $4,500 in December 2021 sharing optimism for growth next year.
Amazon.com, Inc. (NASDAQ:AMZN)’s market capitalization stood at $1.74 trillion as trading ended on December 23rd, 2021. Insider Money’s Q3 2021 survey of 867 hedge funds revealed that 243 had bought the company’s shares.
Ken Fisher’s Fisher Asset Management is Amazon.com, Inc. (NASDAQ:AMZN)’s largest investor according to Insider Monkey’s research through a $6.3 billion stake via 1.9 million shares.
Polen Capital mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2021 investor letter, highlighting that:
“Amazon has also lagged as its revenue growth is slowing on the very difficult comparisons from last year when this behemoth was growing revenue by over 40%. We still expect exceptional long-term growth and significant margin expansion as the fastest growing (and now large) segments of Amazon are also generating the highest margins.”
2. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 248
Meta Platforms, Inc. (NASDAQ:FB) is perhaps the world’s most serious or dedicated company when it comes to the metaverse. It has gone as far as to change its name from Facebook to Meta to reflect confidence in the industry. The company plans to expand its social network to create an immersive virtual reality that allows users to interact with each other in 3D. Additionally, it also sells a virtual reality headset.
Meta Platforms, Inc. (NASDAQ:FB) earned $29 billion in revenue and $3.22 in GAAP EPS, beating estimates only for EPS during its third fiscal quarter. UBS increased the social media holding company’s price target to $425 from $416 in December 2021, on the back of optimism for advertisement spend recovery.
During Q3 2021, 248 out of 867 hedge funds part of Insider Monkey’s research had bought stakes in the company. Meta Platforms, Inc. (NASDAQ:FB)’s market capitalization stood at $932 billion as of 23rd December 2021.
Ken Fisher’s Fisher Asset Management is Meta Platforms, Inc. (NASDAQ:FB) largest investor suggests data gathered by Insider Monkey through holding 7.5 million shares worth $2.5 billion.
Jefferies Group mentioned Meta Platforms, Inc. (NASDAQ:FB) in its Q3 2021 investor letter. It stated that:
“While still early, FB is in the process of building the platforms that will ultimately support the development of the Metaverse. We look at FB’s position through the lens of 4 current investment initiatives: 1) Oculus VR hardware, 2) Smart glasses, 3) Augmented Reality lenses, and 4) “Horizon Workrooms”
Oculus Virtual Reality hardware: Since acquiring Oculus in 2014 ($2B deal), FB has been focused on developing best-in-class hardware and complementary software & services to support VR experiences. The Oculus Quest 2 is FB’s newest VR headset; it retails at $299 and allows users to play games, try fitness classes, play sports, and watch concerts in virtual environments. Most importantly, Quest 2 is linked to users’ Facebook accounts, which means users can seamlessly connect with friends in virtual environments to play games or spend time together. We believe one of FB’s biggest differentiators in VR is its large array of non-gaming experiences that were designed for Oculus. For instance, users can explore extreme terrain in National Geographic Explore VR, join virtual fitness classes, or simulate being a chef. As FB’s hardware continues to improve and becomes less cumbersome, we would expect a flywheel of greater developer and user adoption of VR…”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 253
Microsoft Corporation (NASDAQ:MSFT) is one of the largest software companies in the world. It has gained popularity due to its Windows operating system which remains the dominating product globally in its category. It is also building the Mesh platform, which is intended to be a multiverse based around the software company’s Teams and other applications. Microsoft Corporation (NASDAQ:MSFT) also sells the HoloLens VR headset, which will be used to access the metaverse.
As its first fiscal quarter ended, Microsoft Corporation (NASDAQ:MSFT) reported $45 billion in revenue and $2.27 in non-GAAP EPS, beating analyst estimates for both. Wells Fargo set a $400 price target for the company in November 2021, sharing that Microsoft Corporation (NASDAQ:MSFT)’s Azure cloud computing platform and other growth areas spell for a positive future.
Microsoft Corporation (NASDAQ:MSFT)’s largest investor is Ken Fisher’s Fisher Asset Management who owns 25 million shares worth $7 billion. Insider Monkey’s Q3 2021 survey of 867 hedge funds revealed that 253 owed the company’s shares.
Microsoft Corporation (NASDAQ:MSFT)’s market capitalization stood at $2.5 trillion on December 23rd, 2021.
Polen Capital mentioned Microsoft Corporation (NASDAQ:MSFT) in its Q3 2021 investor letter. It stated that:
“After modest Portfolio activity during the second quarter of 2021, activity increased during the third quarter. We would broadly characterize the various trades into two objectives: 1) managing risk, and 2) managing valuation. In both cases, we aimed to maintain the Portfolio’s growth profile. In aggregate, we believe we were able to increase expected earnings growth while reducing risk and the overall portfolio valuation… We also trimmed Microsoft, which had grown to nearly 10% of the Portfolio. At an 8% weighting, it still represents one of our largest positions.”
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Disclosure: None. 10 Metaverse Stocks to Invest In is originally published on Insider Monkey.
