There’s no shortage of sustained double-digit growth opportunities over the next decade. Cybersecurity, cloud computing, and telehealth are all examples of fast-growing trends that investors can’t seem to get enough of. But if there’s one opportunity that’s set head and shoulders above the rest…
it’s the metaverse.
In simple terms, the metaverse is the next iteration of the internet. It describes a 3D virtual environment that’ll allow users to interact with their surroundings, including other users. Not only is there a gaming/entertainment aspect to the metaverse, but this collective of virtual worlds is expected to breed an entirely new ecosystem.
Making the metaverse tick is a big job, and it’s going to take a large number of companies and innovators. There’ll need to be enough processing capacity, storage capacity, reduced latency for users within virtual worlds, digital identity verification/security, and payment platforms in place, just to name a few of the critical functions necessary for the metaverse to succeed.
Yet, if all goes as planned, the metaverse could be the biggest investing opportunity since the birth of the internet. Matthew Ball, the CEO of venture capital company Epyllion, has estimated the metaverse market value at $10 trillion to $30 trillion within the next 10 to 15 years. Meanwhile, Morgan Stanley believes the metaverse can eventually be worth $8 billion just in China!
Although the metaverse remains a work in progress, select Wall Street analysts and investment banks see three metaverse-associated stocks skyrocketing between 195% and 383% over the coming 12 months.
Coinbase Global: Implied upside of 208%
The first metaverse stock with exceptional upside potential over the next year is the leading cryptocurrency exchange and ecosystem Coinbase Global (NASDAQ:COIN). Analyst Lisa Ellis of MoffettNathanson currently has the highest price target on Coinbase at $600. If it were to trade for this figure, investors would more than triple their money, based on where shares closed this past weekend.
Coinbase would be a pretty obvious beneficiary of the metaverse, given that protocol tokens from blockchain-based games have proved essential to early iterations of a decentralized metaverse. With Coinbase leading the way among crypto investments and transactions, it could become the de facto stop for digital currency purchases needed within virtual worlds or ecosystems.
But Coinbase sees its future in the metaverse going well beyond its cryptocurrency exchange. In December, the company released a note implying that its role will be to create “an identity on-ramp into the metaverse.” Coinbase believes there’ll be numerous metaverses linked together, and that having a secure identity tag, stored as a non-fungible token (NFT), will allow users easy access from one metaverse to the next. In addition to focusing on NFT identity tags, the company notes that it’s working on technology that’ll allow users to purchase their own avatar.
However, investors should understand that Coinbase is far from a lock to succeed. Though it’s been raking in the dough from increased crypto transactions over the past 13-plus months, competition among crypto exchanges is heating up. We’ve watched this same fee-based price war play out with traditional brokerages, and it ended with trading commissions eventually going to zero.
Coinbase is also highly dependent on the success of Bitcoin and Ethereum, which make up the bulk of trading volume on its platform. Any weakness from the “Big Two” can quickly reduce sales and profits. With the metaverse many years away from being a big growth driver for Coinbase, it’s more likely these concerns will limit this stock’s upside.
Matterport: Implied upside of 383%
If you want something a bit more under the radar, borderline small-cap stock Matterport (NASDAQ:MTTR) has the potential to nearly quintuple, at least according to one analyst. Daniel Ives at Wedbush Securities has an aggressive $38 price target on shares of Matterport, which equates to upside of 383%, based on where it closed last week.
Of the three stocks on this list, Matterport has the most direct ties to the metaverse. This is a company that takes physical objects in the real world and creates 3D digital twins of them in the virtual world. The applications for this technology are immediate. For instance, real estate companies are using this technology to allow prospective buyers to get a real feel for properties on the market.
But as you can imagine, there’s plenty of use for Matterport’s spatial data technology in the metaverse. Imagine being able to take your home, or perhaps the home you’ve always dreamed about, and place it on your own plot of land in the virtual world. Though we’re likely a ways away from that happening, investors are already buying into Matterport specifically for the intrigue surrounding its metaverse ties.
For the time being…
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