2 Unstoppable Metaverse Stocks That Could Turn $200,000 Into $1 Million By 2030

The metaverse describes a virtual world that has the potential to add a new dimension to the way we interact socially and do business. The financial opportunities it could create are matched only by the dawn of the internet, and many big and small tech companies are putting their own unique spin on the concept.

Social Media Giants Break (NYSE:SNAP) and Metaplatforms (NASDAQ:FB) are prime examples of this, as the two rivals are taking completely different approaches to this opportunity. And metaverse aside, both companies released their full-year 2021 earnings report in February, which offered a glimpse of their long-term potential.

Here’s why both stocks have the potential to increase your money fivefold by the end of this decade, despite their different strategies.

Image source: Getty Images.

1. The case of meta-platforms

First, let’s recognize the elephant in the room: Meta’s stock has suffered a sharp drop of 27.7% since the release of its 2021 earnings report on February 2. The company claims that recent changes in privacy policies for smartphones issued by Apple and Alphabet could cost it as much as $10 billion in 2022, and investors were also concerned about losing $10 billion from its Reality Labs segment, which is responsible for building the metaverse.

But when we get to 2030 and look back, these issues may turn out to be short-term issues that ultimately lead to long-term gains. Indeed, the metaverse could then represent a $1.6 trillion opportunity, based on some estimates that point to a value of $800 billion in 2024, followed by a compound annual growth rate of 13.1%. during this period.

Meta’s strategy for its virtual world might be similar to its strategy when building social media platforms. It could own the ecosystem, giving it pricing power over everything that happens in it. Meta believes its users would exist digitally as avatars, with the ability to “teleport” to different virtual experiences, and buy and sell digital goods within its metaverse.

Meta also owns Oculus, a maker of virtual reality headsets. If Oculus hardware becomes the primary method of accessing the company’s Metaverse, it means that Meta will no longer be subject to rule changes by third parties like Apple, which removes a major risk.

Mathematically, Meta would have to grow its revenue and earnings per share by 23% each year for its stock to grow 400% by 2030. This assumes that its current price/earnings and price/sales multiples remain constant.

Metric

2011

2021

CAGR

Income

$3.7 billion

$117.9 billion

41%

Earnings per share

$0.46

$13.77

40%

Data source: Meta Platforms. CAGR = compound annual growth rate.

Meta has a decade-long track record that suggests it could smash this mark, and as the metaverse opportunity grows, this stock could be a great place for your money.

A person pointing at two arrows overtaking another arrow, with a cityscape below.

Image source: Getty Images.

2. Snap’s case

Snap, which is the parent company of popular social media platform Snapchat, had a different experience with Meta Platforms this earnings season. Its stock price has climbed 71.4% since its low point on February 3, when it released its 2021 results. The reason is simple: Snap says it has recovered faster than expected from the changes privacy issues that Meta still struggles with, hinting that it is finally getting a win over its main competitor after years of living in Meta’s shadow.

Meta is still 10 times the size of Snap by market valuation, but Snap has an exciting opportunity ahead of it thanks to its totally different take on the metaverse. Rather than focusing on virtual reality, which totally immerses the user, it is a question of developing augmented reality. Where virtual reality makes the physical environment of the user almost irrelevant, augmented reality takes advantage of this and combines the digital world with the real world.

Snap has built its own glasses to facilitate this, called Spectacles, and they are designed to project digital experiences into the wearer’s vision during their daily life. Snap believes this approach is better for user well-being because it promotes human engagement, and it also has the potential for greater adoption because it’s much more convenient.

Metric

2016

2021

CAGR

Income

$404 million

$4.1 billion

59%

Data source: Snap Inc. CAGR = Compound Annual Growth Rate.

Snap isn’t a full-year profitable business yet, but it just reported its first-ever profitable quarter in the fourth quarter. However, analysts expect 2022 to be the first full year that investors see earnings per share, so it could be the perfect time to get involved.

But from a revenue perspective, Snap is growing at a much faster rate than the 23% it needs for a five-fold return by 2030, assuming its current price-to-sales ratio remains constant. Its stock offers a promising opportunity for investors willing to hold until the end of the decade, especially if they are looking for exposure to the metaverse.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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