Though there are plenty of higher-growth trends that traders can pick from, none of them appear to have the potential that the metaverse has.
The metaverse is considered the next iteration of the internet. It will let its users interact with their surroundings and others in 3D virtual environments. Aside from being entertaining, these virtual worlds are a representation of brand-new ecosystems that could be monetized in a number of ways. In addition to the payments within the virtual landscapes, there is the storage, latency, processing, digital verification/identity, and so on, that should be addressed to help make the metaverse work.
It is important to recognize that not all companies are going to be winners. Below is one metaverse stock that could be bought hand over fist, as well as another one that traders should stay far away from.
The first metaverse stock you should buy hand over fist: Microsoft
While it is not a selection that will win any awards for its originality, the tech giant Microsoft is the number one metaverse stock traders could confidently buy today. Microsoft has a few catalysts that help make it one of the best stocks to take advantage of the metaverse growth.
To start with, there is the elephant in the room: Microsoft’s announced a $68.7 billion all-cash acquisition of the interactive gaming company called Activision Blizzard in January. In addition to acquiring Activision’s many well-known gaming franchises (Call of Duty, Warcraft and Candy Crush), this deal is about Microsoft having democratized the game-building process and growing the metaverse beyond gaming itself. Even though the Microsoft CEO Satya Nadella is not entirely sure what the definition of “metaverse” will pertain to, he does think it’ll represent a “collection of individual identities and communities anchored in powerful content franchises that is accessible on all devices.”
Secondly, the company’s roots to the metaverse were planted well before the Activision Blizzard acquisition announcement. For example, Microsoft has been making mixed-reality headsets for over a half-decade. It is currently working on its third generation of the HoloLens headset, which might be used by the United States Army for more life-like mixed reality training. With virtual reality and mixed reality headsets being the first gateway to the metaverse, Microsoft seems to be one of the main companies in great position to thrive.
Microsoft’s third catalyst is its huge operating cash flow. Thanks to quick growth from its cloud infrastructure service Azure, and very high margins and a stable demand from its Office and Windows franchises, Microsoft collected $83.9 billion in cash flow from operations over the year. This gives the company a large amount of capital to invest heavily in the metaverse.
The metaverse stock you should avoid like the plague: Coinbase Global
On the other side of that coin, crypto exchange Coinbase Global is a type of metaverse stock I think investors should stay away from.
Coinbase seems to have two ways to relevance within the metaverse. For starters, it is the top platform to purchase and sell digital money– and blockchain-tethered coins have proved crucial in the initial stages of the metaverse.
Secondly, Coinbase views itself as offering “an identity on-ramp to get into the metaverse.” Coinbase thinks the metaverse will become a collection of communities that will be connected together. Coinbase is working on developing non-fungible tokens.
Beyond the metaverse though, Coinbase has executed fairly well. The company ended last year with 11.4 million monthly users, and it had recorded a $3.62 billion in its full-year net income. That was up over tenfold from the year prior.