The Metaverse has gone from an idea, to a trend to the next big technology frontier in the span of a couple of years. Amongst the craze surrounding this new digital world come different subplots that are as interesting as the Metaverse itself. One of the most interesting stories emerging from the Metaverse’s meteoric rise is how traditional powerhouses such as Microsoft will fare against Meta platforms such as Facebook. In business terms, which company will rule the Metaverse and how will this reflect on its market value?
Before we jump into the stock analysis, let’s do some housekeeping by defining some basic terms:
What is the Metaverse?
In simple terms, the Metaverse is a digital representation of life as we know it. Using technologies such as virtual reality, augmented reality and video, users of the Metaverse will be able to work, play, shop, and socialize in a 3D digital environment. It’s a future where our physical and digital lives start to blend creating enhanced experiences.
What are “Metaverse Stocks”?
Metaverse stocks represent fractional ownership in a metaverse-related company. What are metaverse companies, you might ask? Metaverse companies are the companies offering products, services and experiences in the Metaverse. These stocks could correspond to a company developing gaming experiences or a company selling land in the Metaverse.
Microsoft vs. Meta Platforms: Metaverse Friend or Foes?
One thing that unites the two conglomerates is their shared vision on the importance and potential of the Metaverse. Both companies are heavily invested in developing products and services that fit the Metaverse model. What’s interesting though, is that they will probably not compete for the same market share.
Microsoft is gearing its efforts towards the B2B segment of the Metaverse, enhancing its business meetings offering via its Teams platform. With announcements and products like Mesh and HoloLens, Microsoft is making a clear statement that it wants to dominate the Metaverse of work, both in the software and the hardware segments.
On the contrary, Meta Platform is moving towards a B2C direction, showcasing a strong willingness to be the market leader in virtual and augmented reality gaming. The company is already making strategic movements to buy major gaming players in the space and has already established a dedicated metaverse business unit called Reality Labs.
The company’s goals include the evolution of VR/AR gaming offerings, but Meta Platforms also seeks to broaden their offering to include more leisure and entertainment services. This includes Metaverse communities where people can interact and communicate using avatars. Moreover, traveling to other places is another frontier the company sees a lot of potential in.
Which Stock Will Prevail?
It’s still early days for both stocks. The Metaverse is in its infancy stage and any metrics can’t be used as indication of what is to follow. From a fundamental standpoint, both companies look very strong and this is attributed to their brand name, and history of success.
At this point, the most important factors to determine success are the track record of these companies, their teams, and the amount of investment they are pouring into the space. Their valuation, balance sheets, and cash flows allow investors to be optimistic about the Metaverse future. Let’s put it this way, if anyone is going to make it work, it’s Microsoft or Meta.
The fact that they will be focusing on different verticals, allows investors to explore both options, and potentially add two major tech players with high upside potential to their portfolios. Of course, only time will tell how Metaverse stocks will perform but one thing is certain – we’ll be here to flesh it out and give you the insight and details you need to inform your investment decisions.
