hero or zero? 3 High-Risk Metaverse Stocks That Will Make You Rich…or Broke.
Metaverse stocks are no longer as popular as they were a few years ago. They are now considered risky. Looking back at the end of 2021, it’s just as easy to speculate that they’re a surefire ticket to riches.
At the time, investors were trying to understand what the metaverse was and what it could be. In fact, this space was one that promised a new future and could be monetized. Now investors are not so sure.
Metaverse stocks then hit a meteoric high when metaplatforms (NASDAQ:META) undertook its renaming at the end of October of the same year. However, since then, the company’s spending has looked more like a black hole than the future. As such, cost-cutting has been viewed as a positive for the social media giant, and investors are less excited about higher Metaverse spending than ever.
Still, I believe so Metaverse stocks remain relevant and continue to have legitimate potential. Of course, investors need to realize that these are boom or bust bets.
Now let’s look at some of the riskier Metaverse stocks that can swing either way.
Matterport (NASDAQ:MTTR) is difficult to assess in terms of hero or zero status. The 3D data platform company has some real troubles and some real problems. However, it’s hard to resist the notion that Matterport has simply fallen into an over-the-top fad, and that the success the company quickly found and lost was not really its fault.
What I mean is this: Matterport is a company that had its IPO in early 2021. The company promised to digitize the physical world. That was enough for many investors, whose belief in the metaverse at the time caused them to eagerly seek every opportunity. Matterport wasn’t building a metaverse world or anything particularly risky. Instead, it was more of a pick-and-shovel investment. It was hyped to be the company that would digitize the physical world.
As a result, the company’s share price rose from $12 at the IPO to $28 by the end of 2021. However, the Metaverse hype eventually fizzled and MTTR stock went into a tailspin (under $3 a share today).
Nevertheless, the company continues to grow revenues til today. And while the losses are significant, investors have come to realize that unless the metaverse monetizes more quickly, such companies are unlikely to ever regain their former valuations.
While that’s more of a zero than a “hero” right now, there’s certainly a plus if the company can demonstrate that it can monetize its offering and provide a path for positive returns in the future.
It’s tempting to categorize Roblox (NYSE:RBLX) in a bucket similar to Matterport. Due to the price movement, both were disappointed. Both companies had their IPOs around the same time, benefited from a price surge and peaked in late 2021, but ended up well below their IPO prices today.
But Roblox is more hero than zero, even if IPO investors are still down about 40%. That’s because Roblox continues to build a valuable platform characterized by strong growth and engagement metrics.
Roblox generates substantial revenue with sales of $655.3 million first quarter alone. This corresponds to an increase of 22% compared to the previous year. Average daily active users also increased by that percentage. All of this continued potential makes it a lot easier to overlook Roblox’s $268 million net loss in the first quarter.
Roblox certainly needs to increase operational efficiencies sooner rather than later. However, as long as it can continue to grow and remain relevant, the pressure isn’t that great. Gaming is an attractive sector and Roblox benefits from being a gaming experience developer platform. This will continue to be important and it will allow Roblox to continue striving for hero status.
immersion corp (NASDAQ:IMMR) is a company active in the field of haptic software. Haptics refers to the technology that reproduces the sensations a user would experience in reality when placed in simulated environments.
The company sells across multiple verticals, including automotive, gaming, and mobile. It’s also a relatively small company overall. The company reported briefly about it 7 million dollars in first quarter sales. That revenue fell into a streak of slightly negative year-over-year growth.
immersion corp appears to be a reasonably healthy company. The company is not making a loss but reports net income of $8.27 million for the quarter and $5.1 million a year ago. immersion corp is a solid company. It’s the kind of company that belongs in portfolios that seek exposure to gaming, technology, and the potential of the metaverse.
But is it a hero? No not true. It’s not the kind of company that’s going to grow into a giant any time soon, or likely ever. No hero and no zero, just a solid company overall.
At the time of publication, Alex Sirois held no position (neither directly nor indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the opinion of InvestorPlace.com Posting Policies.