There have been a lot of buzz words being thrown around recently. One that is catching fire is the Metaverse. While the Metaverse certainly brings about an air of excitement, the term is being used quite loosely. This makes it difficult for investors looking for Canadian stocks to know exactly where to park their cash to take advantage of this emerging trend, especially when it comes to choosing the top metaverse stocks to buy.
First, let’s start with what the term “Metaverse” means
The term originated in the sci-fi novel Snow Crash, penned by Neal Stephenson. In his novel, the Metaverse is one virtual reality universe where users are represented by avatars. Sound familiar? It was effectively similar to a large multiplayer online game.
While there is no concrete accepted definition, the term “metaverse” is still most used to describe a 3D virtual simulation that is inhabited by real people through graphics like avatars. Today, there are numerous examples of this including Roblox, Minecraft, Sandbox, and Decentraland.
For traditional investors, the question becomes – how can one get exposure to this massive trend through stock investments?
There is a multitude of ways, so let’s get right to it. And, you'll want to read this article right to the end, as the final option on this list is actually a Canadian metaverse play!
What are the best metaverse stocks to buy right now?
Meta Platforms (FB)
Let’s start with the company that name has Meta in their name. Facebook recently underwent a rebranding in which it changed its name to Meta Platforms. Say what you will about the company’s business practices, it has proven adept at spotting trends and pivoting accordingly.
According to Facebook and CEO Mark Zuckerberg “The ‘metaverse’ is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you.”
The premise is simple. The company is shifting from a social media company into a metaverse company. The move is a natural progression. If the metaverse does turn out to be the crown jewel of Web 3.0, it will be where the majority of us conduct our social networking.
Communicating with our social circle via Web 2.0 will be a thing of the past. With the company’s Oculus VR leading the charge, users will be able to interact with each other in Facebook’s Metaverse. While the Meta platform is years away, the company has already released beta versions of its platform. In certain test videos, Meta employees and creators can be seen interacting with each other around a virtual boardroom table.
What is particularly attractive about a Meta investment is the fact that it is one of the best positioned to bring the Web 2.0 crowd into Web 3.0. As one of the largest social media platforms in the world, it has the reach and scale required to lead the transition.
The company has been under some pricing pressure as of late, and on a valuation basis might be one of the cheaper stocks out there to gain exposure to the metaverse. At the time of writing, it is trading at only 19 times forward earnings and many analysts have double digit price upside on the company.
Of note, you can also buy Meta Platform's stock under a CDR, or Canadian Depository Receipt. The ticker is MVRS.
Nike and Adidas (NKE & ADS)
When we think of the metaverse as investors or people just learning how to buy stocks, we often think of high-flying tech companies like Microsoft (MSFT), Nvidia (NVDA), or Apple (AAPL) excelling in the space. So, if you are not in the Metaverse or NFT space, these ones may surprise you.
However, fashion plays an important role in the Metaverse. Why?
Avatars will be clothed and brands such as Nike and Adidas have recognized this trend. It is, however, important to note that their approach to the metaverse is quite different.
Adidas purchased a significant plot of land in the Sandbox, one of the leading decentralized metaverses. It also announced a partnership with Coinbase (COIN) which is notable given its upcoming NFT platform, along with Board Ape Yacht Club (BAYC) and Punks Comics, two of the most prominent brands in the NFT space.
It subsequently launched its first NFT collection which offers holders exclusive access to Adidas Originals experiences and products.
In effect, Adidas is carving out its influence by partnership and investing in decentralized properties.
For its part, Nike bought RTFKT Studios – an emerging NFT community that was designing highly sought-after NFT wearables for the metaverse. RTFKT also recently launched its CloneX avatars and partnered with OnCyber IO to launch metaverse pods.
The news was met with mixed reactions as many felt that the RTFKT team sold out to corporate America.
Now that Nike owns the entirety of the RTFKT collection, it has complete control over the direction of the platform. Regardless of one’s personal views, the deal was significant and gives Nike huge reach in the NFT space.
In spirit, Web 3.0 was intended to be a decentralized environment but there are many centralized use cases. It’ll be interesting to see which approach prevails but it is likely an answer won’t be known for many years. The key is that both Adidas and Nike recognize the opportunity and are taking action to be at the forefront of the metaverse revolution.
Coinbase and Gamestop (COIN & GME)
These are what I consider to be fringe plays on the metaverse. Since the emerging decentralized metaverses are being built on the blockchain, most of the avatars and items that are poised to interact with these platforms come in the form of Non-Fungible Tokens (NFTs).
In this article, we won’t go into all the details of NFTs but suffice to say, these are digital assets that are minted to the blockchain. Currently, there are several options to buy and sell NFTs but the marketplace is dominated by one platform – OpenSea.
OpenSea has emerged as the primary marketplace for NFTs but it has long been criticized for its slow response to community needs and frequent outages. While a new competitor in LooksRare has since emerged, all eyes are on Coinbase.
This past fall, Coinbase announced its intentions to launch an NFT marketplace. Considering Coinbase has 73 million users across 100 countries, it is largely expected that Coinbase will bring the masses to the NFT space. For comparison's sake, OpenSea has less than a million users on its platform and around 300,000 active wallets.
It was reported that shortly after it announced its intentions to launch an NFT marketplace, more than 1.35 million users signed up for the upcoming platform.
Once the platform is launched, Coinbase will become a massive player in the NFT space – which is the gateway to several decentralized metaverses.
Why did I mention Gamestop? The company recently announced its intentions to launch its own NFT platform. Considering its foothold in the gaming industry and the fact the metaverse will be key to "play to earn" gaming, it is a move worth watching.
It is still very early with both of these, but GameStop in particular only made the announcement within the past couple of weeks.
Once launched, Coinbase and GameStop would be the only two publicly traded companies with NFT platforms.
Another way to think of these is as a metaverse infrastructure play.
When it comes to gaming, there are several laying claims to being metaverse leaders. However, Roblox is the one that sticks. While it is a centralized gaming platform, the company is arguably the biggest and most successful metaverse play thus far.
It has more than 47 million daily active users globally and ~10 million developers who build out new worlds for users to experience.
The difference here is that the company isn’t necessarily looking at AR and VR integration.
It is mainly focused on its own gaming world, has its own currency (ROBLUX), and users can buy/sell various items within the game. Unlike NFTs however, users don’t ‘own’ these assets as it is a centralized platform.
That being said, the company has been incredibly successful and has a userbase unlike any other. That alone makes the company worth a look. The issue with Roblox, can it maintain and grow its userbase on this centralized platform while Web 3.0 surges in popularity. This will no doubt make RBLX stock volatile moving forward.
Only time will tell, but in the true nature of the definition, Roblox most certainly built a metaverse where users interact virtually through the use of avatars in a massive open world. A world that continues to grow thanks to the number of developers that continue to build new experiences for users.
Arguably the most Web 3.0 centric company on this list, and a Canadian one at that, Tokens.com has been investing heavily in the metaverse. The company first started out as a crypto staking pureplay but has since made strides to become a big player in all things metaverse.
Worth noting, Tokens.com was the first staking pureplay to be publicly listed and was the first publicly-traded company to make a significant investment in the metaverse.
The company started with an investment in Metaverse Group which has since become a formal subsidiary of Tokens.com which owns a 67% ownership stake in the NFT based metaverse real estate play.
The Metaverse group owns a portfolio of real estate across many virtual worlds including the highly popular Decentraland. In fact, Tokens.com made the single largest purchase in metaverse history when it acquired a 116 parcel estate (6,090 SQ FT) in the heart of Fashion Street District within Decentraland. At the time, the company paid 618,000 $MANA (Decentraland’s Ethereum based token) which was valued at approximately $3M USD.
Today, the cheapest land parcel available in Decentraland is worth ~$14,000 and that is for the most basic parcel, not near any sought-after districts.
Tokens.com has since announced that would host Fashion week on its virtual property in Decentraland. The agreement includes Decentraland developing the land with buildings, fashion tents and runways in preparation for the event. It also recently partnered with Decentraland, GDA Capital and RENOVI to launch a Start-Up competition aimed at architects, 3D designers, and developers.
If that wasn’t all, Tokens.com formed a strategic partnership with SuperRare in which it intends to invest up to $1 million in virtual real estate on the SuperWorld Platform.
I certainly don’t expect the company to stop here. As a publicly-traded company, Tokens.com has access to capital and is well-positioned to continue investing in the metaverse.
Of note, Tokens.com trades under the symbol COIN on the NEO exchange and should not be mistaken for Coinbase whose ticker is also COIN but trades on the NASDAQ. Given this, investors should be mindful of which COIN they are purchasing when they execute their trades.