3 Metaverse Stocks to Buy to Ride the Digitalization Boom

Stocks to buy

With the world become increasingly interconnected in the digital realm, forward-looking investors ought to check out metaverse stocks. Unless you’re deliberately living the lifestyle of an off-grid luddite, you’ve heard about the metaverse. But what exactly is it?

Trying to find explanations for somewhat esoteric concepts that don’t involve overly complex jargon – laced with a pompous aura – can be incredibly difficult. Fortunately, Builtin.com provides a clear, no-nonsense definition:

“The metaverse is a network of shared, immersive virtual worlds where people can connect with friends, create and play games, work and shop. You can think of the metaverse as a cyberspace, or an evolved, three-dimensional internet where logging in isn’t necessary. It may also incorporate elements of virtual and augmented reality.”

Even better, metaverse stocks are very much a thing. According to data compiled by Statista, the metaverse market may reach a valuation of $74.4 billion by year’s end. Further, the segment could hit $507.8 billion, representing a compound annual growth rate (CAGR) of 37.73%. Even if you’re not a tech wizard, you can understand a CAGR of nearly 38%.

On that note, below are enticing metaverse stocks to add to your portfolio.

Meta Platforms (META)

Source: Ascannio / Shutterstock.com

Once exclusively known as a social media network, Meta Platforms (NASDAQ:META) has arguably become synonymous with metaverse stocks. Broadly speaking, Meta has made heavy investments in metaverse research and development. As well, it made key acquisitions of VR and AR companies, helping to set the stage for its brand pivot as a powerhouse in the burgeoning ecosystem.

Regarding specific company initiatives, Meta has developed a range of VR headsets called Meta Quest. That’s the primary gateway to the company’s metaverse experiences, which includes Horizon Worlds. Meta’s flagship VR social platform, Horizon Worlds allows users to create and explore virtual worlds, socialize, and enjoy entertainment content. Further, Meta has the clear advantage of leveraging its Facebook network to help advertise and integrate its new ventures.

For investors, you just can’t keep META stock down for too long. After suffering a terrible decline in value in 2022, it stormed higher last year. Indeed, shares gained 177% of equity value in the past 52 weeks. Unsurprisingly, it’s a strong buy with an average price target sitting just under $400.

Unity Software (U)

Source: viewimage / Shutterstock.com

A video game software development company, Unity Software (NYSE:U) represents an intriguing but risky idea among metaverse stocks. Earlier this month, Reuters reported that the company will target layoffs that will impact approximately 25% of its workforce. Nominally, that translates to 1,800 jobs. While the cost-reduction implications might help U stock, the cuts also suggest that circumstances haven’t gone to plan.

Still, Unity may attract contrarian interest as one of the metaverse stocks to buy because of the underlying game engine. Critically, the company’s game development engine may be the most widely used in the world. Either way, developers leverage the powerful platform to create three-dimensional worlds, characters and interactive experiences. Logically, this dynamic provides a foundation for myriad metaverse projects.

Nevertheless, the issue with Unity centers on the financials. Sure, the company remains a growth machine, featuring an expansion rate of 23.6% during the past three years. However, investors also want to see a pathway to profitability. Overall, analysts are hopeful, with the high-side target landing at $50.

Roblox (RBLX)

Source: Miguel Lagoa / Shutterstock.com

While Meta Platforms may be synonymous with metaverse stocks, Roblox (NYSE:RBLX) may actually own the world’s biggest digital universe. Per a CNET article, Roblox represents a vast marketplace with ever-evolving experiences. Further, with the advent of generative artificial intelligence, the company is only becoming more relevant in this burgeoning space. Therefore, anyone interested in the metaverse economy ought to consider RBLX.

Per CNET, Roblox released two new AI tools in early 2023 which have bolstered utility in the creator-focused Roblox Studio. As a coding tool, users can now use conversational AI to generate code on the fly. In this way, users can create digital environments just by describing them. I imagine such flexibility and utility can get addictive, meaning that RBLX is one of the metaverse stocks to watch.

As with anything, Roblox comes with risks. In particular, the company is off to a rough start, losing 10% since the beginning of January. Also, while it’s a growth machine, it lacks in financial stability. Still, analysts rate shares a moderate buy with a $44.05 price target, implying nearly 14% upside.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Articles You May Like

3 Tech Stocks to Turn $10,000 Into $1 Million: April 2024
3 Dividend Aristocrats to Buy if Interest Rates Spike to 8%
3 Energy Stocks to Buy Now: Q2 Edition
Trump Media, AI Stocks and More: 3 Top Ex-SPACs to Buy Now
3 Stocks You Need to Buy NOW for Life-Changing Returns