Metaverse stocks captured immense attention in 2021 before quickly fading from the investment scene. Many now dismiss metaverse stocks as artifacts of the zero interest rate era, and while there’s truth in this, the reality is more nuanced. Like other rapidly emerging sectors like cannabis and space exploration, metaverse stocks initially surged on speculation but soon faced a reality check as the market realized their goals were far off.
That led to a swift correction as investors pulled out, causing inflated values to plummet. Yet, for those committed to thorough research, opportunities in the metaverse remain, as forecasts suggest the sector could be worth up to $13 trillion by 2030.
The scenario isn’t just a chance to wait out the storm; it’s an opportunity to invest in stocks with real long-term potential. If you correctly pick companies likely to endure until they reach maturity, benefits from the metaverse’s eventual resurgence could be huge. Despite the current downturn, the potential for significant returns exists for those willing to invest in the future of metaverse tech.
Grayscale Decentraland Trust (MANA)
Grayscale Decentraland Trust (OTCMKTS:MANA) represents a unique investment opportunity among metaverse stocks, offering crypto-shy investors exposure to the asset class while betting on the metaverse to boot. Unlike traditional stocks, which represent a stake in a company, the stock is a trust that exclusively holds the digital asset token MANA (MANA-USD), used in the metaverse platform Decentraland. Think of investing in MANA (the stock) as an indirect method of investing in MANA (the cryptocurrency) without the need to manage digital wallets or navigate the complexities of cryptocurrency exchanges.
Decentraland emerged early as a prominent player in the metaverse domain, with its virtual real estate, once fetching tens of thousands of dollars in cryptocurrency. Although the fervor has cooled, MANA remains a significant long-term Web3 investment. By buying MANA (the stock), investors can indirectly participate in this digital frontier through their conventional investment portfolios.
While investing in MANA (the stock) introduces additional speculative layers — since the stock price does not perfectly mirror the crypto’s asset value — it still presents a less cumbersome way to engage with the burgeoning Web3 sector. Despite its speculative nature, with the stock up over 100% since 2023, it offers a straightforward method for investors bullish on metaverse mega-opportunities to capitalize on multiple emerging technological trends.
Unity Software (U)
Unity Software (NYSE:U) ranks as one of Cathie Wood’s favored metaverse stocks, and the rationale is reasonable. Despite a 39% dip in share prices since January, Wood just keeps buying shares (and hasn’t sold any since December 2022). Unity sits at the convergence of the metaverse, gaming and Web3 — three critical sectors. That positions Unity as a prime metaverse investment for those looking to diversify their digital technology portfolio.
A report from White Brook Capital highlights Unity’s distinctive value propositions, notably its digital twin platform. The platform uniquely replicates real-world objects, materials and people within a Web3/metaverse context, setting Unity apart in the market. Moreover, unlike many metaverse ventures, Unity generates positive cash flow through a substantial advertising network. The ability to generate profit bolsters Unity’s stability amid broader market volatility, sustaining the company until metaverse investments garner broader institutional appeal.
Unity recently appointed new CEO, President and board member Matthew Bromberg to the positions. While his impact remains to be seen, his longstanding experience in the sector may bode well for Unity’s long-term potential.
Applied Digital (APLD)
Applied Digital (NASDAQ:APLD) stands out among metaverse stocks, not by niching into metaverse technologies or consumer services but by providing the essential infrastructure for metaverse operations itself. The company constructs, owns and operates extensive data centers throughout North America, offering a robust platform for metaverse, blockchain and artificial intelligence applications. That infrastructure acts like the picks and shovels during a gold rush, key for scaling emerging metaverse enterprises.
While data center expansion entails significant upfront costs and capital expenditures, Applied Digital has reduced its net losses while increasing revenue over the past five quarters. That progression indicates solid sales and a move toward spending equilibrium, making the company’s financial trajectory enticing as it continues to draw customers to its new data centers.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.