Metaverse and Investing – Opportunities for Retail Investors Part 1: Hardware

The metaverse has fast become a buzzword. Articles have been written on every possible related aspect. But I feel there is a certain lack of pieces on the investment opportunities that Web3 offers.

Premise

Let’s take a step back. What is the metaverse? This encompassing term indicates several things. The following subcategories are considered part of the metaverse:

• Virtual reality;
• Augmented reality;
• NFT;
• Crypto;
• Blockchain;
• Gaming platforms (this is far-fetched, but it is true that the whole 3D modeling part is based on the gaming industry, as well as much of the interaction programming).

The word is considered synonymous with Web 3.0, although there is a fair amount of disagreement on several aspects, even on the name itself.

What I will discuss here are the investment possibilities of these new technologies.

And in my opinion, the possibilities are many. The money that very large companies are investing in this world makes me extremely bullish about the value that can be generated.

Let me give you just a few very well-known examples: Meta bought Oculus VR for 2 billion dollars when there was still only a prototype headset. There was no marketable product at the time of the acquisition.

Microsoft, which apparently produces one of the best-performing augmented reality headsets on the market (HoloLens), is buying a video game production company Blizzard for a frightening amount of money: 68 billion dollars.

The US government closed a 22-billion contract with Microsoft for the development of AR for the military and the provision of HoloLens to soldiers.

I could give you other examples, but I think I made my point.

I am convinced that, given these investments, the road is already partially marked.

Of course, it is also because the metaverse and the technologies underlying it have truly enormous potential. Just think of the use of virtual reality in training. Or of the fact that 2/5 of the world’s Internet users can be considered “gamers” in some sense. Or of the NFT market.

What I want to reiterate is that I am convinced that immersive technologies, blockchain, and everything that revolves around them, are here to stay and that indeed, they will take an increasingly important place in our daily lives.

Starting from this premise, how do I “invest in the metaverse”?

Metaverse and Investments

Let’s start by saying that we can choose to invest in the metaverse in two ways: in the technology that supports it (hardware, software, and infrastructure) or in digital assets (NFT, crypto).

Here we will mainly talk about the first possibility.

Hardware

When I say hardware, I mean it in a very broad way. That is to say, all the devices that allow the use of virtual reality and augmented reality, the sale of cryptocurrencies and NFT, playing video games, etc. Not only the headsets.

It makes therefore sense from an investment perspective to keep an eye on and analyze all the companies that are involved in the production and sale of devices.

This means headsets, mobile phones, tablets, computers, accessories, and their components. This last item can be particularly interesting, because some components, such as microprocessors, have an extremely transversal use, and this lowers the risk for the companies that produce them.

Let’s see some examples, shall we?

Meta (Nasdaq: META) for Meta Quest VR Headsets

Meta currently produces the best-selling headset with nearly 15 million units of the Quest 2. The number is significant because Zuckerberg had named 10 million headsets as an important milestone.

Now, in his opinion, companies will finally begin to consider the potential audience interesting enough to invest in the creation of VR content.

Microsoft (Nasdaq: MSFT) for AR Headsets

The aforementioned HoloLens is currently more suitable for corporate use than for mass adoption. It costs a lot, so it is not marketable to the general public yet. This means that AR content for HoloLens must necessarily be tailor-made for the client.

But, in my opinion, the headset will not remain limited to corporate use much longer. And investing is for the long run, not to cash in in a couple of months.

Snap (Nasdaq: SNAP) for Smart Glasses

Smart glasses are AR headsets, that have the bulk of a pair of regular glasses. The price you pay for this convenience is the performance that is not exactly exciting. Especially since smart glasses are in many cases to be connected to the phone, which means that they are little more than a screen.

But, what we said for HoloLens applies here as well. Snap is pretty likely to evolve and produce something more performing in the near future. And we must think about the future, not the present.

Universal Display Corporation (Nasdaq: OLED) for OLED Technology, Used for Screens

VR headsets have screens. Mobile phones have screens. Computers have screens. Tablets as well. Our cars are increasingly full of displays of various types. So screens are here and will be for a while.

Apple (Nasdaq: AAPL) and Samsung (Nasdaq: SSNLF) for Smartphones and Tablets

While we wait for comfortable and performing headsets, AR will use phones and tablets for a long time. But we also use them more and more to navigate, work, and play. On Apple there are also uncontrolled – and in my opinion in 99% of cases, unfounded – “rumors” about a headset that should be imminent. The problem is that this headset has been imminent since 2016. Too bad the company has never released any official or unofficial statement about it.

TO BE CONTINUED…

ATTENTION: The companies mentioned above are NOT to be considered investment advice. These are just examples to better clarify what I mean.