The metaverse is an expression initially coined in the 1992 sci-novel, ‘Snow Crash’, and is the concept of online 3D virtual spaces that are interconnected. The metaverse has many use cases such as working, gaming, e-commerce, and more and we delve into two top companies to buy.
Snap Inc.: Bull vs Bear arguments:
Snap Inc. (NYSE: SNAP) is a camera company founded by Evan Spiegel and has had a turbulent time on the public markets since its IPO in 2017.
Snap Inc. is famous for its social media app Snapchat which is used by 293 million daily active users (DAUs) and 75% of the U.S. population between the ages of 13 and 34.
Through its app, Snapchat, which has filters and avatars, it is helping to lay the building blocks for the metaverse to achieve “overlaying computing in the real world”. Snapchat has continued to expand its AR features and launched virtual try-on for clothing, bracelets, glasses, and more. Several well-known companies such as Prada, Farfetch, and Piaget were early adopters of this.
Snap Inc. is also expanding into wearable tech and released its Snapchat spectacles in May, dedicated to recording and creating content for Snapchat. Although these are not available to buy, they provide a glimpse of the company’s future ambitions.
Despite its userbase and future potential, the company is losing money with a net loss of $72 million and is trading at a relatively rich valuation of over 20X sales. Apple’s IDFA changes have also impacted revenue and weighed on its stock price.
Facebook: Bull vs Bear arguments:
Facebook (NASDAQ: FB) is rebranding to ‘Meta’ and will trade under the ticker symbol ‘MVRS’ which has turned investors’ attention to the metaverse and Facebook’s efforts in the area.
Facebook has continued to produce stellar returns and grew revenue by 35% in Q3 to $29 billion. Its large cash reserves have enabled it to invest heavily, particularly in AR/VR development, where over 20% of its workforce are now working, which will be critical to creating the metaverse. CEO Mark Zuckerberg has also stated that he believes the “metaverse is the next chapter for the internet”.
The company acquired Oculus in 2014 and has also made several acquisitions of gaming developers in recent years to help create games and to help in attracting and engaging users. Oculus also launched ‘Horizon Workrooms’, which enables collaboration in virtual offices and gives a flavor of the use cases and what the metaverse may look like.
The company has also released its Ray-Ban Stories, which are smart fashionable glasses. This hardware is one step on the way to building the metaverse and immersive experiences.
Regardless of the rebrand and what Facebook will call itself going forward, some issues will likely persist. This includes regulatory scrutiny, which has come to the fore once-again due to the release of Facebook Papers with internal documents revealing that Facebook has put profit before safety. Investors may question the ethics of the company prior to investing and whether this may impact the business in the future.
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Contributing Writer at MyWallSt
Colm's favorite stock is Virgin Galactic as it is representative of his visions for our world in the future.