Is The Metaverse Overhyped? How To Invest In The Metaverse In 2022

Source: Meta.com

“The metaverse” seems to be everyone’s favourite buzzword in 2022. At its core, the metaverse refers to a virtual world where users can play, interact with each other, buy stuff, and even collaborate on work projects via digital avatars.

Mark Zuckerberg is betting big on it – changing Facebook’s corporate name to Meta and spending more than $10 billion on virtual reality (VR) developments in 2021. Fashion brands like Gucci and Nike are launching virtual stores and selling virtual outfits and accessories for avatars.

Clearly, more and more companies think that being in the metaverse is key. Disney recently appointed an executive to lead their metaverse strategy while JPMorgan set up a virtual lounge in the metaverse.

To be sure, the technology itself is still in a nascent stage. Even Meta acknowledges it could take 10 – 15 years for the metaverse to come into fruition. 

Hype or the next big thing?

So is the metaverse overhyped or will it become the next iteration of the internet? If you think about it, people in the 1990s were probably wondering the exact same thing about the internet and what it could do. 

Newsweek even published an article in 1995 with this dismissive headline “The Internet? Bah!”.

While it’s too early to say if the metaverse will really infiltrate every aspect of our lives, I do think that in a few years from now, it will be perfectly normal to have virtual interactions in the digital world. It may even be hip to hold weddings in the metaverse – and give crypto as angpows!

Bloomberg estimates the global metaverse revenue opportunity to reach $800 billion in 2024. Meanwhile, JPMorgan predicts the metaverse will have a market opportunity of $1 trillion in yearly revenue. 

China wants in 

In a sign that the metaverse could be here to stay, China has set up a metaverse committee to develop and regulate metaverse applications. 

China’s tech giants like Tencent, Alibaba, and TikTok owner ByteDance are all exploring the technology too, seeing it as a way to engage with the youngest generation of internet users.

Tencent shared its metaverse vision last year and recently announced plans to acquire gaming device maker Black Shark to break into the augmented reality (AR) and VR hardware market. Alibaba has plans to launch AR glasses for virtual meetings. Meanwhile, ByteDance has already acquired VR headset maker Pico – a company similar to Meta’s Oculus.

According to Morgan Stanley, the metaverse market in China could be worth a whopping $8 trillion in the coming decades. 

Ways to invest in the metaverse

If you think the metaverse could be the next evolution of the internet, there are several ways for you to invest in the metaverse:

  1. Metaverse-related crypto such as SAND or MANA
  2. Metaverse-related NFTs that let you buy digital assets (such as real estate) in virtual worlds
  3. Metaverse-related stocks

Not familiar with crypto or NFTs, or don’t have the stomach for the volatility of such assets?

In my opinion, the more sensible way of investing in the early stages of the metaverse would be through buying stocks of companies that are actively involved in the metaverse. 

How to identify opportunities in the metaverse

Many companies are currently building different parts of the infrastructure that will one day become the metaverse. These are still early days, but here are the opportunities within the metaverse space to consider. 

Improved connectivity / low latency

Source: Meta.com
  • Just as nobody likes laggy games, the speed of transmission will be crucial in the metaverse. This is where 5G will be very important going forward
  • The metaverse will need heavy duty computing power, which will largely come from the cloud. This means potential opportunities for Amazon’s AWS, Microsoft’s Azure, among other cloud providers
  • There needs to be a way to manage the huge amounts of data that will be processed in the metaverse. Data centres stand to benefit, as do companies that operate real-time content delivery networks (CDN) such as Fastly

Metaverse experience

  • To create a realistic virtual world, you need the technology to enable lush animations, visual effects, personalisation, and marketplaces
  • Companies like Roblox and Unity Software enable the creation of 3D content and experiences

Digital twins

Source: Meta.com
  • Imagine an exact replica of your house sitting in the metaverse. That’s a digital twin of your home. The concept ranges from virtual versions of humans (avatars) to virtual replicas of objects or processes
  • Potential commercial applications include creating factory simulations to optimise production and building models to predict climate change
  • Matterport and Nvidia come to mind. The former is a spatial data company that turns spaces into a digital twin and the latter’s Omniverse platform is central to its digital twin projects

Hardware and devices

  • What’s the metaverse without the accessories to amplify the experience? 
  • Think AR / VR headsets, controllers and other equipment. Meta has Oculus, Sony has PlayStation VR, and Apple is reportedly designing a VR headset

Pick a Metaverse ETF for diversification

At this early stage, it’s hard to predict which company will strike gold with its metaverse developments. So as I evaluate the metaverse stocks on my watchlist, I’ve also invested in the Roundhill Ball Metaverse ETF first to cover all bases. (P.S. I bought the ETF commission-free using Syfe Trade!)

The ETF holds stocks of 50 companies that are actively involved in the metaverse, such as Roblox, Microsoft, Meta Platforms and Nvidia. This way, I hedge my bets and get some exposure to the companies that may one day become the Google or Amazon of their fields. 

In closing, the metaverse is currently still in its infancy, although it shows a lot of promise. Now may be the time to get in early!

This article is not meant to be investment advice. Always do your own research before making any investments.

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