Just how much will the Metaverse be worth for investors over coming years? According to JPMorgan’s most recent analysis, the market opportunity will drive over $1 trillion in annual revenues.
In a wide-ranging research note out earlier this month (see “Opportunities in the metaverse”), the world’s most respected Wall Street house made the case that “the metaverse will likely infiltrate every sector in some way in the coming years,” and that “we see companies of all shapes and sizes entering the metaverse in different ways, including household names like Walmart, Nike, Gap, Verizon, Hulu, PWC, Adidas, Atari and others.”
In other words, for investors, this is quite possibly the biggest emerging opportunity looking ahead over the next decade, and those who fail to gain real exposure could find their portfolios badly lagging those of their peers.
The piece also contends that the investment opportunity has many facets, including technology, entertainment, retail, and services.
With that in mind, we take a look below at some of the most interesting stocks with exposure to the metaverse theme.
Snap Inc. (NYSE:SNAP) operates as a camera company. Its flagship product, Snapchat, is a camera application that helps people communicate visually with friends and family through short videos and images called Snaps. Snaps are deleted by default, so there is less pressure to look pretty or perfect when creating and sending images on Snapchat. Snapchat contains five distinct tabs: Camera, Communication, Snap Map, Stories, and Spotlight.
According to Goldman Sachs analysts in a December note, “Snap is at the forefront (and an emerging industry leader) with respect to the rise of augmented reality, as management has prioritized investments in the development and adoption of AR technologies/use cases.” That’s really the case for SNAP as a metaverse play.
Snap Inc. (NYSE:SNAP) recently announced the pricing of $1.3 billion aggregate principal amount of 0.125% convertible senior notes due 2028 in a private placement. That follows the company’s strong Q4 and 2021 financials.
“2021 was an exciting year for Snap and we made significant progress growing our business and serving our global community,” said Evan Spiegel, CEO. “The strength of our core business has enabled us to accelerate our investments in augmented reality, transforming the way that the Snapchat community experiences the world through our camera.”
The stock has suffered a bit of late, with shares of SNAP taking a hit in recent action, down about -10% over the past week. Shares of the stock have powered higher over the past month, rallying roughly 21% in that time on strong overall action.
Snap Inc. (NYSE:SNAP) managed to rope in revenues totaling $1.3B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 42.4%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($3.7B against $851.8M).
SFLMaven Inc. (OTC US:SFLM) is an interesting addition to this group that highlights some of the other types of metaverse plays that investors are likely to crowd into in the months ahead. SFLM is going to be the world’s first metaverse jewelry store, selling high-end vintage digital jewelry items for avatar use.
SFLM has already gotten involved in the NFT market and has been one of the most successful auctioneers of high-end luxury goods over the past two decades, powering nearly $150 million in sales. The company saw nearly 50 million impressions on its eBay store page in January alone and has over 100k individual positive reviews.
SFLMaven Inc. (OTC US:SFLM) recently announced its intention to establish a major presence in the metaverse by announcing it is nearing the completion of a real estate purchase in Decentraland.
“In 2003, when ecommerce was still just getting off the ground, SFLMaven charged in to become one of the first jewelers to operate online,” commented Joseph Ladin, CEO of SFLMaven. “We’ve built our success over the last two decades by embracing ‘Tomorrow’, and the new and innovative ways of doing business it brings. First it was the Internet. Then it was eBay. Now, ‘Tomorrow’ is the Metaverse. And SFLMaven is excited to have the opportunity to build just as much success in the virtual jewelry realm as we have in the physical one.”
That should provide a tailwind for shares. But the stock may also benefit from organic growth in its core business here in the real world.
“When we closed last year, we pointed to a number of key tailwinds driving our jewelry business that could factor into accelerating growth in 2022,” stated Ladin. “So far, that seems to be playing out this year, with our Q1 performance putting us on pace for double-digit organic growth, which helps to lay a sturdy foundation as we expand into new domains, including non-fungible tokens and the Metaverse.”
SFLMaven Inc. (OTC US:SFLM) noted in its release out this morning that the Company is poised to conduct its biggest auction sale of the year this evening. The three weeks ending on Thursday, February 17, saw sales of $305k, $202k, and $252k. With a strong showing tonight, the Company will have topped $1 million in sales over a 4-week period. Hence, management believes SFLMaven is now on pace to potentially drive more than $12.5 million in jewelry sales in 2022, or 16-20% growth over the Company’s performance in 2021.
Fastly Inc. (NYSE:FSLY) bills itself as the world’s fastest global edge cloud network provider. It has become a popular metaverse play among retail investors given the importance of edge cloud computing in solving the latency issue so important to supporting metaverse functionality.
Fastly provides real-time content delivery network services. It offers edge cloud platform, edge software development kit (SDK), content delivery and image optimization, video and streaming, cloud security, load balancing, and managed CDN.
Fastly Inc. (NYSE:FSLY) recently announced the launch of the edge deployment option for the Fastly Next-Gen WAF (powered by Signal Sciences). This marks a key milestone in integrating Signal Sciences’ award-winning trusted web application firewall (WAF) technology with Fastly’s edge cloud network.
“Enterprises have diverse security architecture challenges — from managing and auditing technology stacks to implementing security policies and protections across disparate applications in heterogeneous environments,” said Chris Rodriguez, IDC’s research director for Network Security Products and Strategies. “Fastly is executing on its strategy to provide security anywhere, making it an important choice for organizations needing a flexible WAF that protects business-critical apps and APIs in a breadth of deployment options.”
Traders will note the context of a larger bearish trend in FSLY. But market participants may want to pay attention to this stock. FSLY has a track record that includes a number of dramatic rallies, and we are currently seeing a major jump in recent trading volume to the tune of 280% over the long run average, which could represent a capitulation process for the bearish trend.
Fastly Inc. (NYSE:FSLY) currently trades at a market cap of $2.1 billion and has a significant war chest ($527.9M) of cash on the books, which must be weighed relative to about $125M in total current liabilities. One should also note that debt has been growing over recent quarters. FSLY is pulling in trailing 12-month revenues of $354.3M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 18.2%.
Other core stocks tied to the metaverse theme include Unity Software Inc. (NYSE:U), Matterport Inc. (Nasdaq:MTTR), Roblox Corp. (NYSE:RBLX), NVIDIA Corp. (Nasdaq:NVDA), and Meta Platforms Inc. (Nasdaq:FB).
