If there’s one big theme primed to become 2022’s “Next Big Thing” tech story, it’s the “Metaverse” – a persistent shared virtual 3D world operating at the intersection of digital and physical reality. Analysts and entrepreneurs have come to see the Metaverse as the next stage in the evolution of online life. And it’s no longer a story set in some distant future. The future is now.
The tech and social infrastructure is being laid down already, with major players like Meta Platforms Inc. (Nasdaq:FB) and NVIDIA Corp. (Nasdaq:NVDA) leading the way. And there will doubtless be many opportunities for new innovations to create new leaders overnight as the Metaverse comes together and matures.
It’s a growth theme Bloomberg recently calculated could be worth nearly $800 billion as a market theme. In other words, there’s more here than just web architecture and cloud technology. It’s going to be like building and then colonizing a new manufactured planet – sure, the people that make planets will be first in line. But once the planet is there, it’s going to need cities, roads, agriculture, transportation, food, and entertainment.
It’s a new frontier. Go Meta, young entrepreneur. Go Meta.
All of that said, 2022 has started off with a growth stock pullback on interest rate fears, and many stocks with clear exposure to emerging technology themes are taking a beating. Investors interested in building exposure to the Metaverse may want to see this turn of events as a potential gift that allows them to gain that exposure without having to chase momentum at nosebleed prices.
As such, we profile a handful of stocks below that could prove to be Metaverse winners as the year plays out.
Unity Software Inc. (NYSE:U) has become a core play in the Metaverse narrative. The company develops video gaming software. It provides software solutions to create, run and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The firm operates as a platform for creating and operating real-time 3D (RT3D) content.
Its solutions for games, automotive, transportation & manufacturing, film, animation & cinematics, architecture, engineering & construction, brands and creative agencies, gambling and EdTech sectors.
Unity Software Inc. (NYSE:U) recently announced the availability of Meta Audience Network for in-app bidding access in Unity Mediation, available within Unity Ads. With this integration, publishers get self-serve and streamlined access to a premium demand source, making it quicker and easier to maximize their revenue. Meta Audience Network is the latest addition to Unity Mediation, solutions that give developers access to the most comprehensive demand, with over 60+ ad ecosystem partners as well as enhanced tools to set pricing strategies, bid competitively, and maximize overall ad fill.
“This partnership with Meta Audience Network will unlock important access to one of the leading bidders in the industry for developers of all sizes using Unity Ads,” said Felix Thé, SVP of Product Management, Operate Solutions, Unity. “Our priority is always to enable our developers’ success and with this partnership we are delivering a streamlined path to maximizing revenue potential. This is a significant step we are taking to ensure we are equipping publishers with what they need to achieve operational and monetary efficiencies.”
The stock has suffered a bit of late, with shares of U taking a hit in recent action, down about -3% over the past week.
Unity Software Inc. (NYSE:U) managed to rope in revenues totaling $286.3M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 42.6%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($1.3B against $579M).
B2Digital Inc (OTC US:BTDG) is a micro-cap and a far more speculative name than other stocks in this list. Shares are trading under a penny. But the company is pulling in seven figure revenues and growing that top line at a triple-digit clip, and it may deserve a closer look after its 50% jump on Thursday following a revealing shareholder letter from CEO Greg Bell that carved out a strong path ahead and hinted at BTDG possibly becoming the first major combat sports brand planning a home in the Metaverse. It’s a good example of a company outside the tech sector engaging with this theme in a credible manner, which is likely to become an interesting dynamic as the year progresses.
BTDG frames itself as “the premier development league for mixed martial arts”. You can think of its B2 Fighting Series – or “B2FS” – as something like the farm league for the UFC. B2FS fighters regularly graduate to the big leagues, and B2FS live MMA events offer serious fight fans a chance to see the MMA stars of tomorrow as they score their first big victories. But the company is more than that – it’s also building a network of ONE MORE Gym fitness centers (as in, “come on bro.. you can do ONE MORE!”) that dovetail on the marketing side with its B2FS events.
B2Digital Inc (OTC US:BTDG) has been growing fast according to its recent results and communications, with MMA Event Revenues up nearly 600%, Ticket Sales up over 750%, and Gym Memberships up nearly 200% on a year-over-year basis for the 9 months ended December 31. And this week’s shareholder letter pointed to that growth as just the very early stages of a much larger vision.
“We saw many important trends take shape last year, including a big jump in the pace of our Live MMA Events, a steady increase in our average per-event revenue levels, and the successful strategic expansion of our ONE MORE Gym business. The result was triple-digit percentage growth in basically every major metric we follow…That said, we strongly believe we have only scratched the surface of what lies ahead as we enter 2022.”
The letter also pointed to the company’s ambitious goal of putting on 50 live MMA events in 33 cities across more than 20 states in 2022, driving as much as $3 million in live event sales, not counting sponsorships, PPV, TV, or anything from its network of Gyms.
Speaking of gyms, BTDG noted in the release that, “Over the next 30 months, we plan to have ONE MORE Gym locations in 20 major markets that also represent regular stops for B2 Fighting Series live MMA events” and, “we are also setting up for a February launch of our Jiu Jitsu training brand as an integrated facet of ONE MORE Gym locations.”
B2Digital Inc (OTC US:BTDG) also hinted at its Metaverse ambitions in the letter, which is why we wanted to cover it. “We are firm believers in the importance of the Metaverse technology revolution, and we plan to position the Company to capitalize on it in the form of Live MMA Events being hosted in a manner that is integrated into the operations of key partners with strong positioning in the Metaverse. We are very excited about the growth potential this avenue offers, and we will release more specific details on this strategy soon.”
Matterport Inc. (Nasdaq:MTTR) has become one of the key metaverse plays. The company claims to be leading the digital transformation of the built world. It offers a spatial data platform that turns buildings into data to make nearly every space more accessible.
According to the company, “Millions of buildings in more than 194 countries have been transformed into immersive Matterport digital twins to improve every part of the building lifecycle from planning, construction, and operations to documentation, appraisal and marketing.”
Matterport Inc. (Nasdaq:MTTR) recently announced it has completed its acquisition of Enview, Inc. (“Enview”), a pioneer in the scalable, artificial intelligence (AI) for 3D spatial data.
“For more than a decade Matterport has led the digital transformation of the built world,” said RJ Pittman, Matterport’s Chairman and Chief Executive Officer. “We turn buildings into data, and for the next decade of growth, our focus centers on unlocking the power of that data for our customers around the world. Enview’s powerful spatial data analysis technology fits right into this strategy and readily complements the Matterport platform. Together, we can deliver breakthrough building analysis and data insights to our customers including automated building inspections, AI-powered space planning, and property utilization analysis to deliver operating efficiencies in a completely digital environment,” he added.
While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action MTTR shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -13% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities.
Matterport Inc. (Nasdaq:MTTR) is just starting to ramp up in terms of commercial data, so we wouldn’t put much emphasis on financial data. The story here is about how this type of 3D spatial capture tech plays into the narrative of a growing new frontier being built in cyberspace.
Other core stocks involved in the Metaverse theme include Roblox Corp. (NYSE:RBLX), Meta Materials Inc. (Nasdaq:MMAT), and the Roundhill Ball Metaverse ETF (NYSEARCA:META).