The emergence of augmented reality – the intersection of real and virtual environments that incorporate interactions between humans and machines using technology and portable devices – is better known as the metaverse. Grand View Research expects the meta-verse to grow to a $ 679 billion market by 2030, giving it a compound annual growth rate of 30%.
Many technology companies have rushed to provide the hardware and software needed to build and interact with these virtual worlds. While many metaverse stocks can turn into a compelling transition in this universe, they can find particularly interesting opportunities in Metaplatforms (FB -2.11% ) and Roblox (RBLX -0.75% ). Let’s take a closer look at these two metaverse stocks.
Due to its flagship Facebook page, which covers a large percentage of the world’s population, the company, formerly known as Facebook, opted for a shift into the metaverse. While the name change may ultimately do little for the company, Meta is likely to play an increasingly important role in this virtual world.
First, about 2.8 billion users visit one of their social media sites – Facebook, Instagram, Messenger or WhatsApp – every day. This network provides an advantageous starting point. In addition, it has built a leading position in VR glasses with its Oculus Quest 2 headsets. Qualcomm chips, this helmet claims a leading position in its market. In addition, the accompanying creation of “haptic gloves” gives the feeling of feeling, an experience that could promote their role in Metaverse.
Investors should also know that the company generated $ 118 billion in revenue in 2021, 37% more than in 2020. Admittedly, Reality Labs, which represents its Oculus headset, was just over $ 2 billion of that revenue.
Overall, Meta posted a net profit of $ 39.4 billion that year, up 35% from a year ago. An increase of 96% in its provision for income taxes offset a relatively slower growth in costs and expenses.
Despite this growth, the share price has fallen more than 30% in the last 12 months. Investors hammered the stock into slowing earnings growth, and the guidance it offered for the first quarter led to the largest loss in market value in stock market history.
Other measurements, however, suggest that it may be time to buy Meta-dip. The decline left the company with an exchange rate-earnings ratio of 15, an attractive valuation, although the forecast for first-quarter revenue growth of between 3% and 11% is coming true.
All in all, Metaverse Meta offers a wide range of growth opportunities. Between the company’s massive user base and its VR products, Meta may live up to its new name.
Tech giants like Meta are not the only companies with potential in the meta-verse. Roblox has built a massive social ecosystem through its game development platform. Users can develop and play games on platforms ranging from PCs to smartphones to VR headsets. Developers can also make money on games by bringing people together in the meta-verse on their social platform. Then there is the virtual currency – Robux – used on the platform, which could become something more as Roblox dives deeper into the meta-verse.
Thanks to its ecosystem, it has attracted around 55 million users. More than half of this user base was under 13 until last year. However, he began to attract increased interest from over 13 and gained increasing attention on a professional level. For example, a partnership led to Chipotle developed a virtual restaurant in the meta-verse, and he recently used the platform to promote National Burrito Day.
The growing popularity of Roblox is evident in the economy as the company reported revenue of $ 1.9 billion in 2021, an increase of 108% from 2020. loss of $ 492 million compared to $ 253 million in 2020.
But thanks to $ 820 million in deferred revenue, the operating cash flow was $ 659 million. Roblox considers money in users’ digital wallets (the aforementioned Robux) as “deferred income” that only recognizes income when users use it. This implies that its finances are in better shape than its losses would indicate.
However, the company also published the results for January 2022 in its annual report. Of particular concern is this month’s booking growth of just 2% to 3% year-on-year, a significant slowdown from year-round booking growth of 45% in 2021 compared to 2020 figures.
This news, coupled with a widespread sale of technology stocks, caused the Roblox stock price to fall about 70% from its highest in October. This means that its price-to-sell ratio, which hit 40 in November last year, is now at a record high of 10. Nevertheless, Roblox’s potential in the metaverse may be a good reason to add shares to this valuation.
This article represents the opinion of the author, who may disagree with the “official” approval position for an advanced consulting service Motley Fool. We are heterogeneous! Challenging an investment dissertation – even one of our own – helps us all think critically about investing and make decisions that help us become wiser, happier and richer.