Wednesday’s Headlines: Metaverse of Madness

Wednesday’s Headlines: Metaverse of Madness

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

2U (TWOU) +5.0%

ShotSpotter (SSTI) +4.9%

Cloudflare (NET) +3.9%

Evolent Health (EVH) +3.6%

CrowdStrike (CRWD) +3.2%

Moving Down ⬇️

Chegg (CHGG) -8.4%

Upstart Holdings (UPST) -6.4%

Twitter (TWTR) -5.4%

StoneCo (STNE) -4.7%

Sea Limited (SE) -4.5%

1. In a blog post this week, Meta (FB) said that it’s testing virtual sales inside its metaverse platform Horizon Worlds. These experiences will include new tools that allow creators to sell virtual assets and experiences within the worlds they build, including things like fashion accessories for users’ avatars and exclusive access to parts of their customized virtual worlds. However, many were irked by potential creator fees of up to 47.5% of the sale price, depending on where the sale takes place. For a company that has long spoken out against Apple’s 30% App Store fees, the word “hypocritical” is being tossed around. However, recent Citi Bank estimates that the metaverse economy could be worth between $8 trillion and $13 trillion by 2030, so getting this right — especially amidst declining ad revenue growth — is paramount for Meta’s future success. Read the official report here.

2. It’s bad news all around for Big Tech as Apple (AAPL) faces down a potential iPhone supply shortage. Assembly partner Pegatron has been forced to shut down its operation in Shanghai due to COVID-19 resurgence, threatening 20%-30% of Apple’s iPhone supply. This follows disruptions last month to Foxconn, Apple’s largest supplier. iPhone sales — which accounted for 58% of Apple’s total revenue in Q4 2021 — have already experienced a dip in Q1 as new iPhone SE sales disappointed amidst inflation fears and supply chain issues. With Apple’s fiscal Q2 2022 earnings report coming up on April 28th, investors will be keen for a strong showing as well as the reassurance of guidance, though don’t expect supply chain issues to recede any time soon. You can read more on this here.

3. Ongoing conflict in Ukraine and the threat it poses to our digital safe spaces have resulted in a boon for cybersecurity specialist CrowdStrike (CRWD). As physical conflict on the ground amplifies, so too do the threats from private and state-backed hackers, resulting in “unprecedented demand” for CrowdStrike’s cloud-based security tools to combat ever more sophisticated cyber-attacks. The experts have taken note of this uptick in demand and lifted their ratings for the business, with Goldman Sachs analyst Brian Essex estimating that CrowdStrike’s share price could surge roughly 28% to $285. Such bullishness sent shares up more than 3% yesterday to give the company a gain of almost 13% year-to-date (YTD), though it is still a good 25% off its highs of November 2021. Read more here