What are Metaverse stocks and why is everyone talking about them?

Virtual worlds are coming to life and the companies involved in making them are gaining attention…

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a group of five people lie on the floor with their heads touching, each wearing hi tech goggles over their eyes as if in a metaverse workplace collaboration.

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Online interactions had become a common occurrence for many people even before the shift created by COVID-19. Though, our online experiences could be set to evolve from 2D videos into 3D immersive digital environments with the rise of the metaverse.

Investors might be wondering what the metaverse is, what companies are involved with it, and what its significance is. While some might be aware of Facebook’s name change to Meta Platforms Inc (NASDAQ: MVRS), the extent of the emerging industry goes beyond the bounds of the United States stock market.

So, let’s dive deeper into the metaverse.

What are metaverse stocks?

The metaverse is essentially the next step in the evolution of the internet. In reality, the concept isn’t exactly a new one. An online digital world where people interact with each other via virtual and/or augmented reality has been featured in pop culture. Prime examples of this include the movies Ready Player One, Tron, and The Matrix.

Over time, technology has progressed to the point where personal computers now have the processing power to render interactive 3D virtual environments. Combine this with the advances in virtual reality hardware, such as the Oculus Quest 2 (owned by Meta), and the possibility of working, socialising, and playing in a digital world is becoming possible.

In turn, the companies that are involved in making this possible are being dubbed ‘metaverse stocks’. As we mentioned before, Meta (previously Facebook) is a well-known example of this. However, there are a few ASX-listed companies that might fit into the metaverse stock category.

The first Aussie example of a company with metaverse exposure is game developer Playside Studios Ltd (ASX: PLY). Interestingly, in its November capital raising, the company said part of the proceeds would be going towards establishing a dedicated R&D team to blockchain gaming linked to the metaverse.

Another ASX-listed company with ties to the digital environment is the geospatial tech company Aerometrex Ltd (ASX: AMX). In October, the small-cap company announced that its 3D model of San Francisco would be used to create a metaverse. Specifically, Terrestrial Software Development purchased the model for $250,000 to develop its ‘Lunaverse’.

What’s behind the buzz?

The excitement surrounding the metaverse is palpable. This may not be surprising if it is set to be the next iteration of the internet. After all, some of the largest companies in the world have been built on the emergence of the internet. For example, Apple Inc (NASDAQ: AAPL), Microsoft Inc (NASDAQ: MSFT), and Alphabet Inc (NASDAQ: GOOGL).

Research published by Bloomberg last week indicated the metaverse could be an $800 billion market in 2024. Notably, the analysts believe game makers will expand their platforms to incorporate live events and social media. This sizeable opportunity means investors are salivating at the potential upside that metaverse stocks might offer.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Mitchell Lawler owns shares of Apple and Meta Platforms, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Meta Platforms, Inc., and Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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