Over the last several months, investors have been hearing more and more about the metaverse and its massive business potential. By 2024, the size of the metaverse market could be $800 billion or more.
While companies like Meta Platforms (NASDAQ:FB) and NVIDIA (NASDAQ:NVDA) are clear leaders in the metaverse race, they won’t be the only ones to benefit as this emerging tech market heats up. Here are three of the less well-known metaverse stocks to consider.
One of the promises of the metaverse is that it will allow for more realistic person-to-person interactions in virtual worlds.
Match Group (NASDAQ:MTCH), the parent company behind such well-known dating sites as Tinder and OkCupid, is now betting that the metaverse will be the future of dating.
Recently, Match Group offered early details of its plans for a dating metaverse.
In this virtual world, singles would be able to share virtual experiences through their digital avatars. One such plan involves a feature called Single Town, in which users could visit virtual bars or stores to meet one another.
By bringing metaverse technology to the dating world, Match Group hopes to more closely replicate the ways people meet and get to know each other in real life. These features will dovetail with in-app money called Tinder Coins that will power an economy of virtual goods and services. Tinder Coins are expected to roll out sometime in 2022
Match Group has several advantages that could help it as it builds this new metaverse dating platform. To begin with, the company is the unrivaled leader in the online dating market. Six of the top 10 dating apps in the United States are owned by Match Group.
Given the increasing popularity of online dating, this positions Match Group to grow and profit as more people seek romantic relationships digitally.
If the introduction of metaverse features on Tinder is successful, Match Group can also implement them across its other brands. In total, the company owns dozens of dating platforms.
By replicating its metaverse presence on these platforms, Match Group could see success from virtual reality technology over and over again. When the Single Town feature was announced, Match Group management made it clear that the feature could be easily leveraged by the company’s other platforms.
Although Nintendo (OTC:NTDOY) is primarily a gaming hardware stock, the company has deep roots in augmented reality.
Long before investors began paying attention to the concept of the metaverse, Nintendo had rolled out the enormously popular Pokemon Go game. This mobile game uses AR technology to allow players to interact with the real world through the game interface.
While it was not recognized as an early metaverse use case at the time, the game and others like it have garnered new attention with the rise of interest in virtual reality.
Pokemon Go may be Nintendo’s most prominent metaverse success, but it isn’t the only one. Other AR games released by the company include Pikmin Bloom and Animal Crossing: New Horizons.
All of these games are new iterations of much older game franchises, demonstrating the promise of AR and VR in revitalizing existing gaming properties. Nintendo’s history of working with large game franchises will likely allow it to continue rolling out games updated with augmented reality mechanics for years to come.
Nintendo also has a massive base of existing users. Nearly 100 million Nintendo Switch consoles have been sold since the device was introduced in 2017. Because it can be used as a handheld console, the Switch is a nearly ideal platform for Nintendo’s future metaverse offerings.
Unlike other metaverse companies, Nintendo won’t have to sell new devices to build an audience for its games. Instead, it will be able to focus its efforts on development and tap its existing user base as products are introduced.
Nintendo stock has had some difficulties in recent months. Poor earnings results early in the year and supply chain constraints have both weighed heavily on Nintendo shares. The stock is, however, priced low relative to sales. Given the potential of metaverse technology over the next several years, Nintendo could also see strong gains as an underrated metaverse stock.
Like Nintendo, Roblox (NYSE:RBLX) is a gaming company that has already constructed wildly successful virtual worlds.
As businesses begin exploring the potential of the metaverse, Roblox is well-positioned to benefit from interest in virtual reality.
Roblox plans to develop its own metaverse in which interpersonal relationships and user safety will both be prioritized. This focus on safety is especially important for Roblox due to its overwhelmingly young user base.
That isn’t to say, however, that the Roblox metaverse will only be for the young. The company is already creating features that will draw adult users. Virtual concerts, for example, could bring in older customers who wouldn’t normally have as much interest in ordinary gaming. This focus on developing an older audience with more disposable income will almost certainly help Roblox increase its revenues in the years to come.
Roblox also plans to leverage the metaverse for more than just entertainment. In November 2021, the company created a $10 million fund for K-12 educational development.
Roblox eventually plans to have its software deployed in classroom settings, allowing students to learn and interact virtually. As schools adopt metaverse technology for teaching, Roblox hopes to become one of the primary virtual reality education platforms.
Although it is a very young company, Roblox appears to have decent stock fundamentals that could make it an attractive buy. In Q3, the company reported a 102 percent increase in year-over-year sales and a 31 percent increase in daily user numbers. Its price-to-sales ratio sits at about 30, making it rather expensive. However, strong future growth from metaverse development could make Roblox a decent value.
While the giants of the metaverse market draw more attention, these less prominent stocks also stand to gain from the rise of virtual realities. As more companies move into the emerging metaverse space, expect to see even more under the radar metaverse opportunities.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.