The metaverse market is hard to pin down. It integrates so many different technologies, it often seems nebulous. But it’s exactly this diversity, from blockchain and artificial intelligence (AI) to the Internet of Things (IoT) and extended reality that makes the metaverse an inevitable outcome. Also, it makes metaverse stocks a compelling consideration.
After the hype died down in August 2023, Bain & Company forecasted that metaverse market size could reach $900 billion by 2030. The caveat? The market’s seed stage will last at least five years.
But just as it happened with digital assets like Bitcoin (BTC-USD), early exposure is where the highest returns begin. So are these winning seedlings visible now? Let’s explore three such stocks.
Unity Software (U)
Year-to-date (YTD), Unity Software (NASDAQ:U) is down 39%. From its 52-week low of $22.20, U shares are now just 12.3% away. Despite a pricing scheme mishap that resulted in Unity CEO resigning, it remains a powerhouse of content creation.
Clearly, the Metaverse will need easily accessible and streamlined content-creation tools. And Unity Software is the most versatile platform to do it. Unity Software is handling the entire content pipeline from 3D assets to animation and physics. Also, it is birthing hits such as Ori and the Blind Forest, Escape from Tarkov and Pillars of Eternity.
Although Epic Games with its Unreal Engine (UE) is gaining traction, it is not a publicly traded company. Moreover, it is so versatile that 49% of developers using Unity Software dab into Unreal Engine. But 76% of UE developers dab into Unity Software, according to SlashData.
This is visible from U’s 35% year-over-year (YOY) increase in Q4 of 2023 revenue. However, the company tools’ development is still offset by lack of monetization, having incurred a net loss of $253.9 million in the quarter versus $287.7 million loss in Q4 of 2022.
To get into the green profit zone, Unity Software is deploying multiple measures. Those include a 25% workforce reduction, cloud hosting, reducing the need for offices and making software licenses more appealing for growth.
Matterport (MTTR)
YTD, Matterport (NASDAQ:MTTR) is down 30%. At its 52-week low of $1.74, this penny metaverse stock is 5.9% away from revisiting the bottom. Although in competition with Autodesk’s (NASDAQ:ADSK) Construction Cloud, Matterport is disruptive in its attempt to digitize the real world via subscriptions and licensing.
Eliminating time and energy to procure metaverse assets from scratch, Matterport uses a 3D lidar camera system to capture the physical world. Its Cortex AI platform then crunches the data into interactive 3D assets. Similar to geospatial mapping systems, Matterport licenses the captured data to third parties with multi-channel sales strategy.
In April, the company surpassed one million subscription milestones. Making 60% of revenue, Matterport’s subscription revenue grew 23% YOY in Q4 2023. Like many startups, it operates at a net loss. But, it has been steadily dwindling. For example, it was $65.7 million for full-year 2023 versus $116.6 million in 2022.
Thus, consider its present price level of $1.85 versus Nasdaq’s average price target of $3.88. Therefore, MTTR is one of the cheapest and potentially most profitable metaverse stocks.
Meta Platforms (META)
Originally founded in 2004 as Facebook, Meta Platforms (NASDAQ:META) is a software and a hardware metaverse component. Further, it’s an exceptionally large one owing to market dominance of Quest virtual reality (VR) headsets.
Although Meta’s Reality Labs division has yet to reach profitability, the company has deep enough pockets without needing seed funding. Moreover, Mark Zuckerberg mastered the craft of utilizing user data. This makes it more likely for Meta Platforms, as a social capital engineering company, to anticipate metaverse user needs.
With the integration of AI agents into Meta Platforms, the company is closer than any at combining all metaverse aspects. Best of all for investors, the stock is a relatively safe exposure, with shares are up 42% YTD. At an average price target of $543.4 versus current $500, META is becoming increasingly more attractive, both long-term and short-term.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Shane Neagle did not hold (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.