In this article we present the list of 10 Stocks That Will Own the Metaverse. Click to skip ahead and see the 5 Stocks That Will Own the Metaverse.
Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corporation (NASDAQ:NVDA), and Alphabet Inc. (NASDAQ:GOOG) are three companies the smart money is betting big on that should one day own the metaverse, which has the potential to be one of the most lucrative ventures in human history.
There’s no simple way to define what the metaverse is or will be, but a broad definition could describe it as a collection of virtual worlds in which people interact with each other through avatars. And while the delivery mechanisms could be many, a true metaverse experience is seen as one which will use VR headsets, sensors, and haptic feedback to completely immerse the user in a 3D world.
While the metaverse is most commonly associated with gaming, it has the potential to transform and play a role in nearly every facet of our lives, from how we work and conduct business, to how we socialize, consume entertainment, and spend our money. Rudimentary examples of metaverses already exist, primarily in the form of gaming type experiences like Roblox (primarily because of the presence of live events on the platform, which other online games like Fortnite have also hosted) and Meta Platforms’ Horizon Worlds (a more focused, though early-stage attempt at a true metaverse experience).
What differentiates a metaverse from a traditional online video game, which otherwise has many of the same elements, is the broad real-life applications that a metaverse could offer. Socializing, work, education, live events, or conducting metaverse-related business all figure to feature prominently in these worlds. Entire economies are expected to spring up within these worlds that will actually lead to real-world, but metaverse-based jobs, such as game designers, visual architects, and fashion designers, and virtual land owners (and landlords?).
We’re already seeing some astounding prices being paid for virtual property in games like The Sandbox, where more than $1 million was spent on virtual land so those owners could digitally live near Snoop Dogg. As more and more celebrities and influencers start heading into the metaverse, these scenarios will continue to magnify, with people spending huge sums to live near celebrities and making large sums if they can get celebrities to endorse their metaverse clothing or other creations.
It’s that kind of real-world imitating economic backdrop, and the ability to otherwise conduct actual real-world business through the platform that has prognosticators so excited about the growth potential and future scope of the metaverse, which could be worth trillions of dollars.
While the extreme ends of that growth aren’t likely to be felt any time soon, as the technology simply isn’t there yet (and likely won’t be for many years to come) to create a truly immersive metaverse, the market is nonetheless expected to grow at a very impressive 39.4% CAGR through 2030.
If you believe in the long-term growth potential of the metaverse and are looking for some stocks to invest in that should be among the leaders in the space, you’ve come to the right place. The following list of top metaverse stocks is based on the latest shareholder data from a collection of some of the best investors in the world.
Photo by mahdis mousavi on Unsplash
Our Methodology
The following metaverse stocks are ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q2 2022 reporting period.
10 VR Stocks That Will Own the Metaverse
10. Unity Software Inc. (NYSE:U)
Number of Hedge Fund Shareholders: 23
Meta Platforms, Inc. (NASDAQ:META), NVIDIA Corporation (NASDAQ:NVDA), and Alphabet Inc. (NASDAQ:GOOG) are three names most likely to own the metaverse in the years and decades to come. Another company that will have a big role to play in the metavolution is Unity Software Inc. (NYSE:U).
With gaming and immersive graphical experiences being core to the metaverse experience, 3D development platforms like Unity Software Inc. (NYSE:U)’s will be key to building the backbone and eye candy that will shape our digital futures. Unity is already making money from such endeavors, in addition to standard video games, pulling in $617 million in revenue in the first half of this year. The company is poised to merge with app monetization company ironSource, with a shareholder vote on the issue taking place on October 7. That should give the company and its content creators even more effective means of making money from their creations, be they meta-related or otherwise.
Unity Software Inc. (NYSE:U) crashed to a new low in hedge fund ownership during Q2 following a 41% drop in the number of funds long the stock. Greg Eisner’s Engineers Gate Manager and Nehal Chopra’s Ratan Capital Group were some of the funds that sold out of Unity during the second quarter. Jim Davidson, Dave Roux, and Glenn Hutchins’ Silver Lake Partners has more than 10% exposure to Unity in its 13F portfolio, owning just under 35 million shares.
The ClearBridge Investments All Cap Growth Strategy was buying shares of Unity Software Inc. (NYSE:U) during the first quarter, explaining why in its Q1 2022 investor letter:
“We took advantage of a correction in higher-multiple stocks early in the first quarter to purchase shares of Unity Software (NYSE:U), a leading platform to create, run and monetize 3D content. With about 1.6 million monthly active creators versus roughly 15 million potential content creators in gaming alone, we believe the company’s Create Engine is still underpenetrated relative to its core addressable market. We similarly see a long runway for growth in Unity’s Operate Solutions segment given its advertising network commands single-digit share of the $60 billion mobile app install ad market today. Furthermore, we believe Unity is well-positioned to expand its addressable market to include industries beyond gaming, on both the operate and create sides of their business (Exhibit 1). The company is not yet free cash flow positive but given strong net expansion rates and high gross margins, we see a path to improving profitability over time, with management notably targeting positive free cash flow this fiscal year.”
9. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Shareholders: 26
Japanese electronics giant Sony Group Corporation (NYSE:SONY) is one of the biggest players in the metaverse at this point given the traction that its PlayStation-based VR headset has achieved, selling over 4 million copies worldwide. Sony recently partnered with English Premier League club Manchester City to recreate that team’s football stadium in the metaverse. Sony also sells sensors and other imaging technology that could be utilized by other companies engaged in the development of metaverse experiences.
26 of the hedge funds that are tracked by Insider Monkey’s database were long Sony Group Corporation (NYSE:SONY) on June 30, up 30% from three quarters earlier. Ben Jacobs’ Anomaly Capital Management initiated a position of 1.65 million Sony shares during Q2, giving its 13F portfolio 6.81% exposure to the company.
Cooper Investors discussed Sony Group Corporation (NYSE:SONY)’s role in the burgeoning music rights landscape in the fund’s Q4 2021 investor letter:
“In recent years we have observed a growing market for music rights which represent another way for owners of record labels and music libraries like portfolio holdings Warner Music Group and Sony (via its subsidiary Sony Music, ~25% of our estimated enterprise value) to deploy capital, grow their businesses and create value for shareholders.
In the first few days of 2022 Warner closed a deal to acquire David Bowie’s back catalogue for about US$250m which follows on from Bruce Springsteen’s catalogue sale to Sony for upwards of US$500m and Bob Dylan’s sale to Universal Music for a similar amount.
The trend in demand for music copyrights is clearly strengthening, with competition for these assets coming from traditional music companies (Warner, Sony) as well as specialist investors and private equity…” (Click here to see the full text)
8. Roblox Corporation (NYSE:RBLX)
Number of Hedge Fund Shareholders: 38
Roblox Corporation (NYSE:RBLX)’s eponymous mobile game is one of the earliest examples of a metaverse in action, as the game features a collection of virtual worlds and activities created by millions of different content creators that can then be engaged with by players, a small number of whom exist within the environment at the same time and can interact with one another. Players can also buy fashion items and accessories for their avatars, allowing them to develop a unique look that sets them apart from other players’ avatars.
In addition to the millions of standard game and hangout rooms, Roblox has also played host to several live events, including live concert experiences from renowned artists like The Chainsmokers. However, the limitations and annoyances of the Roblox platform can somewhat obscure the immense promise of what the metaverse could be, as you’re constantly bombarded with popup ads and gaudy in-experience ads trying to sell you stuff at all times. Despite that, Roblox had nearly 60 million daily active users in September, showing how popular shared virtual worlds not only could be, but already are.
Hedge funds have bailed on Roblox Corporation (NYSE:RBLX) over the past two quarters, pushing ownership of the stock down by 38%. Some of the eponymous game’s biggest bulls were doubling down on the stock during Q2 however, as Jim Simons’ Renaissance…
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