3 Metaverse Stocks to Buy Right Now

Metaversion became a hot topic last year as speculative investors cheered the potential creation of a vast VR world supported by cryptocurrencies and decentralized applications. But over the past year, that enthusiasm has faded, as it does at a high level Platform metaHorizon Worlds and Decentralized he spluttered.

Rising interest rates and other macroeconomic headwinds then drove investors to more conservative investments, and the market seemingly lost appetite for all meta-related stocks. Despite this decline, investors should still consider buying these three stocks, which provide some limited exposure to the metaverse within their larger holdings.

A person falls apart into a VR world.

Image source: Getty Images.

1. Autodesk

Autodesk (ADSK -0.88%) is best known for its AutoCAD computer-aided design and drafting software, but also provides a wide range of cloud-based software for architects, engineers, manufacturers and media professionals. Many of the key tools used to build digital worlds within the metaverse can be found in the Autodesk portfolio.

Autodesk Maya, 3ds Max, Mudbox, and Motionbuilder are all used to create 3D animations and special effects for video games, TV shows, movies, and virtual reality software. It also recently integrated Revit, a building modeling tool, into Epic Games’ Twinmotion 3D visualization software platform. Proving that the metaverse isn’t just for gaming, this partnership allows professionals to collaborate on 3D models in real-time.

Autodesk shares have fallen about 30% this year as investors worried about its cooling growth. It expects its revenue to grow 14% this year, compared with 16% growth in fiscal 2022 and fiscal 2021. Analysts expect only 10% growth in fiscal 2024. It blames the slowdown on macro and pandemic-related headwinds, which is higher a combination of short-term contracts that generate lower upfront payments, geopolitical issues in Russia and tough currency headwinds.

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However, Autodesk also remains solidly profitable, its net sales retention rate remains comfortably above 100%, and its stock looks reasonably valued at 27 times forward earnings. Investors who want a balanced play on the metaverse — as well as exposure to the mission-critical architecture, engineering, and manufacturing sectors — should take a closer look at these stocks.

2. Sony

Japanese conglomerate Sony (SONY -0.38%) it’s also expanding into the meta through its gaming division, which generated 26% of its revenue and 12% of operating income last quarter. The PS5’s popular multiplayer games are already an entry point into the meta, but Sony is also expanding its presence in the VR market with its PSVR headsets — which are tethered to PlayStation consoles and encourage game developers to add more VR features.

The first version of PSVR, which was released for PS4 in 2016, sold about 5 million units by early 2020. Sony plans to launch the second-generation PSVR 2 in February 2023. The new headset will cost $550, compared to the launch price of $400 for the original device. That price seems steep, especially since the PS5 costs $500, but Sony’s decision to move forward with a new headset suggests that there are still brighter days ahead for the VR and metaverse markets.

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As for the rest of Sony’s businesses — which include its movies, music, consumer electronics and image sensor divisions — they are recovering in the post-pandemic market. It expects its revenue to grow 17% this fiscal year, but its net income to fall 5% as it sells a lower mix of higher-margin first-party games, licenses fewer shows and movies to streaming media platforms and navigates tough currency. against the wind. That said, Sony still looks incredibly cheap at 16 times forward earnings.

3. An apple

finally Apple (AAPL -1.46%) It is widely expected to enter a meta version next year with a mixed reality (MR) headset that combines augmented reality and virtual reality features. Not much is known about the device yet, but recent rumors suggest it will be lighter and more powerful than Meta’s current generation of Quest headsets.

Apple has often disrupted markets it did not create. It is widely credited with popularizing MP3 players, smartphones, tablet computers and smartwatches, but only entered these spaces after other companies had first tested the market. If Apple pulls off the same feat with MR headsets, it could become a new source of revenue that would diversify its business beyond the iPhone (47% of its revenue last quarter) while also hooking more users to its ecosystem of services.

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If Apple’s upcoming headset gains enough momentum, it could become the basis for its own meta version. This new computing platform would allow Apple to run additional apps and subscription services beyond its core iOS, macOS, watchOS and Apple TV platforms.

This is just speculation for now, but Apple’s core business remains resilient in its own right. Analysts expect its revenue to grow 3% and 2% this year, respectively, as the 5G upgrade cycle ends in 2021, and to accelerate in 2023 as it introduces new products and services. Its stock looks reasonably valued at 22 times forward earnings, and its $169 billion in cash and marketable securities make it a safe-haven tech stock as rising rates punish companies with poor liquidity.

Randi Zuckerberg, Facebook’s former director of market development and spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Leo Sun has positions in Apple and Meta Platform. The Motley Fool has positions in and recommends Apple, Autodesk, and Meta platforms. The Motley Fool recommends the following options: long March $120 Apple calls and short March 2023 $130 Apple calls. The Motley Fool has a disclosure policy.

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