Chris’ note: To round out the year, this week, I’m sharing with you our best insights on the metaverse. It’s a series of online virtual worlds you step into.
Judging by the feedback we get, there’s a lot of interest in this megatrend from your fellow readers. And as Palm Beach Research Group analyst Grant Wasylik explains below, the metaverse is poised to be the next trillion-dollar tech trend.
Grant published this insight on August 5 over at our Palm Beach Daily e-letter. And he showed how games such as Roblox… NFTs… and Facebook (now Meta Platforms) are coming together to create the metaverse.
My 9-year-old daughter is a serial entrepreneur…
She’s built her own home. Runs a café. Delivers pizzas in her pink convertible.
And she’s not extraordinary.
My 10-year-old son also runs his own business. So do most of their friends.
These whiz kids are making six or seven figures in their spare time. But they’re not building empires in the physical world. They’re doing it virtually.
It’s happening somewhere called the “metaverse.”
That’s a shared virtual environment where we can live, work, and play. But it has tangible real-world implications.
In some cases, you can convert assets from the metaverse into real-world money. And you can use real-world money to invest in the metaverse.
I know this might sound like a plot from one of the Matrix movies.
But advances in the internet… artificial intelligence… machine learning… and blockchain are creating a virtual economy parallel to our real-world economy.
Even if you don’t want anything to do with the metaverse, it’ll have major implications for the real world – including the potential for life-changing gains from its technologies.
Since it’s relatively new, the metaverse is confusing for most people. But I believe it’ll be the next trillion-dollar trend in technology.
The metaverse encompasses all types of virtual worlds many of us already use: video games… eSports… social media… digital collectibles… cryptocurrencies… non-fungible tokens (NFTs)… and virtual reality (VR).
But the difference between the metaverse and regular VR is the metaverse has direct tie-ins to the real world. It’s a modern internet of sorts.
There are even virtual economies built around these games.
One example is the game Roblox…
My kids use real-world money to buy Roblox’s virtual currency, Robux. (I’ve supplied a few gift cards, so I know.)
They use their Robux to create avatars who interact with places, things, and other avatars. (An avatar is a virtual representation of yourself.)
These avatars can buy and sell real estate and build businesses just like in real life. What’s cool is that… if they meet certain requirements… players can cash out their Robux for U.S. dollars.
Roblox has been a big hit. It went public – with the ticker RBLX – at a valuation of more than $38 billion in March 2021. That’s bigger than S&P 500 companies such as AutoZone (AZO), General Mills (GIS), and Motorola (MSI).
And the metaverse is becoming a global phenomenon…
For example, some people in the Philippines have quit their day jobs to play the game Axie Infinity full-time. They battle for potions, digital tokens with a value of about 20 cents each on the market, and sell them for real money.
Some Filipinos make $1,000 to $2,000 per month… more than twice the average salary in the country.
But this is just the beginning of the metaverse rollout…
I spoke to top metaverse expert Andrew Steinwold, who founded the investment firm Sfermion.
Here’s what he told me:
It’s already incredible what’s going on in these virtual worlds today. We’re only 1% of the way there.
But going forward, we’re going to be in virtual environments… with lightweight headsets… We’ll shake hands with coworkers (with both people feeling it through haptic gloves)… and our brains will be tricked into thinking that we’re hanging out in the conference room together.
And when you’re playing in these virtual worlds, you might be wearing suits where if you grab your sword or gun, you’ll feel it. And if you’re stabbed or shot in a game, you’ll feel that as well (a slight shock – nothing like the real thing).
It sounds like sci-fi, but this is the direction we’re headed. Throughout history, we’ve designed technology to be fun, inviting, and approachable. And this will be the same. It will feel normal, not spooky.
One area Steinwold is bullish on within the metaverse is NFTs. These digital tokens allow you to trade all types of assets in the metaverse. And you can use them in the real and virtual worlds.
There’s a tremendous amount of growth potential ahead. And we’re just scratching the surface of what NFTs – and the metaverse – can do.
I know the metaverse sounds futuristic. But imagine it’s the 1970s, and someone told you about a secret government project called ARPANET.
At the time, only geeks used ARPANET. But it was the precursor to today’s internet… which has been creating trillions of dollars of value annually for years.
How many people can imagine living in an internet-less world now?
Or take cryptocurrencies. In 2008, when Satoshi Nakamoto wrote his obscure whitepaper on bitcoin (BTC), which was then worth less than one cent, you probably would’ve thought it was exclusively for nerds and libertarians.
Today, bitcoin has a market cap of about $725 billion. And it’s traded as high as $64,863.
Now, major companies are already eyeing the metaverse…
CEO Mark Zuckerberg said that within about five years, Facebook “will effectively transition from people seeing us as primarily being a social media company to being a metaverse company.” [Since Grant penned this essay in August, Facebook has become Meta Platforms (MVRS) to reflect its goal.]
That’s right. One of the world’s most well-known companies – and the U.S.’ fifth-largest company by market cap – plans on becoming a metaverse company in five years.
And Facebook isn’t alone. Look at the surge in “metaverse” mentions in recent earnings calls…
Palm Beach Daily editor Teeka Tiwari says it takes two things to make a fortune from the markets: finding a massive trend in its early stages and positioning yourself in the right companies to ride that trend.
Bloomberg forecasts the metaverse market to reach $800 billion by 2024. That’s nearly $1 trillion in just three years.
That’s the definition of a massive trend. And we’re still in its early stages.
Now, many of the companies that will dominate this space are in their startup phases. We’re so early, some of the dominant players may not have been born yet.
But if you want exposure to the metaverse, consider Big Tech companies Amazon.com (AMZN), Alphabet (GOOG), Facebook [now Meta], and Roblox. They will lay the groundwork for the intersection between virtual and real economies.
And if you want broader exposure, consider the Roundhill Ball Metaverse ETF (META). It holds 50 globally listed companies – including Chinese tech company Tencent (TCEHY), Microsoft (MSFT), and Roblox – actively involved in the metaverse.
If the metaverse is new to you, that’s a good thing. It’s still off the mainstream radar, so you have a chance to get in before the masses do.
Remember, you don’t need to bet a lot to make a lot. This is a rare chance to put a small stake into a trillion-dollar trend and potentially see it turn into massive gains.
Regards,
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Grant Wasylik
Analyst, Palm Beach Daily