The talk about the upcoming meta-verse has reached a fever level in recent months. In the latest developments, Metaplatforms (NASDAQ: FB) – the company formerly known as Facebook – changed its name to highlight the focus. But what exactly is the meta-verse and how can investors make money?
Simply put, the meta-verse is a virtual world that will harness the power of a collection of new technologies, including augmented reality (AR), virtual reality (VR) and video, and allow users to interact in a digital world. While this may seem like a lot of science fiction, many of the elements are already in place and companies are struggling to venture into this brave new world.
Investors are always looking for the opportunity to enter the first floor of the next big trend, and the meta-verse can provide such an opportunity. Let̵[ads1]7;s look at three companies that are well positioned to take advantage of this evolving trend, which can make investors a fortune in the process.
Nvidia: Supports metaverse
There is little question about that Nvidia (NASDAQ: NVDA) has already been a boon for shareholders in recent years. The designer of graphics processing units (GPUs) is the undisputed leader in the field, with a dominant share of 83% in the market for discrete desktop GPUs.
Parallel processing – the ability to run a variety of complex mathematical calculations at lightning-fast speeds – not only helps render true-to-life images in video games, but has also made GPUs a staple for building artificial intelligence (AI) systems and moving data in cloud computing systems and data centers. It also enables groundbreaking technology in self-driving cars.
This has helped the stock climb more than 130% over the previous 12 months and delivered a staggering 8,800% gain over the past decade. Investors may be surprised to hear that this may just be the beginning.
Nvidia GPUs support many of the technological advances needed to bring the metaverse to life. Using the same technology that creates true-to-life images in video games, these semiconductors perform a similar function in the digital realm.
The company continues to produce fantastic growth even as the meta-verse moves from the drawing board to reality. In the third quarter, Nvidia delivered revenue that grew 50% year over year, which does not even include the enormous opportunity metaverse has to offer.
Nvidia generated revenue of $ 6.7 million last year, but it pales in comparison to the company’s total addressable market (TAM), which management estimates at $ 250 billion by 2023.
Running metaverse will only expand Nvidia’s already enormous potential, he adds another $ 10 billion target market over the next five years.
Roblox: A budding metaverse
If the meta-verse is a virtual world where users build homes, work and play, then Roblox (NYSE: RBLX) already has a head start. The online entertainment platform allows users to build, explore and create video games and digital 3D worlds.
Famous musicians organize listening parties and perform virtual concerts for their users, and Roblox was named Timeits first list of Time100’s most influential companies, which “makes an extraordinary impact around the world.”
An example of how users interact with Roblox’s digital realm is the recently introduced “Vans World”. The shoe and clothing company focused on action sports sponsored a virtual room dedicated to their products. The immersive experience allowed users to “go skateboarding, check out the store, [and] see what new items Vans had for sale. “Users can even browse and purchase physical items. This gives just a glimpse of the huge digital worlds Roblox could create.
Roblox’s revenue in the third quarter counteracted the usual “reopening” narrative, which suggested that companies thriving during the pandemic needed to be corrected. Revenues of $ 509 million increased 102% year-on-year, while orders of $ 638 million increased by 28%. While the company’s net loss increased by 52%, its free cash flow increased 7% to $ 171 million.
Daily active users (DAUs) of 47.3 million increased 31% year over year, while hours of engagement of 11.2 billion increased 28%. This illustrates that not only does Roblox attract new users, but existing players are very engaged. The growing user base attracts more developers, and creates a good cycle.
Roblox generated revenues of around $ 924 million in 2020, but management estimates estimate market opportunities at $ 600 billion, suggesting that a huge opportunity remains.
With its own budding metaverse, Roblox may well have a jump on the competition.
Meta platforms: All-in on the meta verse
No discussion of metavers would be complete without the inclusion of Meta platforms. The company formerly known as Facebook signaled that it went all-in on the meta verse with the recent and highly published name change.
Late last month, at a keynote address at the company’s developer conference, CEO Mark Zuckerberg said, “From now on, we’ll be metaverse first, not Facebook.” Going forward, Meta will focus on building products and services that will usher in the era of the metaverse, describing it as “the next development of social connection … [where] you will be able to socialize, learn, collaborate and play in ways that go beyond what is possible today. “Zuckerberg goes on to suggest that there may be as many as 1 billion people joining the meta-verse during the next 10 years.
Meta Platforms has already invested in a number of products that in the long run can function as a gateway to the metaverse. The Oculus virtual reality headset, smart sunglasses in collaboration with Ray-Ban and the Portal video chat device are probably just the beginning. Facebook Reality Labs works with haptic gloves that can help users “feel” virtual objects in the meta verse.
The company’s social media platforms, led by Facebook, will provide Meta Platforms with the capital they need to initiate this change. In the third quarter, revenue grew by $ 29 billion by 35% year-on-year – even as the spectrum of privacy reforms rolled out apple (NASDAQ: AAPL) hung over the proceedings. Even in the midst of headwinds, Meta generated more than $ 9.1 billion in net revenue and $ 9.5 billion in free cash flow, providing it with plenty of resources to pursue its virtual ambitions.
Virtual worlds = real possibility
Make no mistake: Although the metaverse is still largely conceptual, it comes and the opportunity is great. Morgan Stanley analyst Brian Nowak believes the meta-verse represents an addressable $ 8 trillion market, and companies are striving to meet their demand.
Each of these companies represents an early driving force working to create the upcoming meta-verse, and while its full potential is still years away, these companies are setting the stage, which could make investors a fortune over the coming decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We are motley! Asking questions about an investment task – even one of our own – helps us all think critically about investments and make decisions that help us become smarter, happier and richer.