I’d like to begin this article by informing you that I am personally opposed to the overall concept of a metaverse. My bias against it stems from the belief that, as a project, it lacks the substance necessary to deliver on its financial promises. After all, for it to succeed, the quality of life in virtual reality would have to surpass that of the real world. The idea of living in a matrix just doesn’t appeal to me enough to root for it.
That said, it is still a major technological project with several early adopters who remain exceptionally bullish on its prospects. From the financial standpoint, it certainly has potential, should the process of wearing headsets and living in 3D models of the real world prevail. As such, I’m going to tell you about three metaverse stocks to sell in case that doesn’t happen.
Snap (SNAP)
I’ve been critical before of Snap (NASDAQ:SNAP) through the lens of its artificial intelligence failures, but it seems the company’s metaverse offerings struggle as well. Its current foray into the metaverse sector is Snap Augmented Reality (AR), which is essentially a rebrand of the standard Snapchat filter feature.
Through this re-positioning of an already extant feature, Snap has hoped to capitalize on some of the hype around the metaverse concept. Yet, just like with its AI ventures, the company seems to have missed the mark. Despite boasting a year-over-year revenue increase and smaller net losses in Q1 2024, Snap lost money in all four quarters of 2023 and continued the trend in the latest quarter.
Furthermore, its latest earnings report mentions the improvements made to Snap AR but does little to explain how they impact its bottom line or drive new revenue opportunities. Now with its new AR glasses in a closed beta amongst tech reviewers, the company’s metaverse prospects still need time to mature.
Roblox (RBLX)
In some ways, Roblox (NASDAQ:RBLX) represents the earliest iterations of a functioning metaverse. That’s because the gaming platform offers the basics of a consistent avatar that can be used to interact in several different virtual spaces. However, the company has relied on a free-to-play, pay-to-win business for a little too long, and global economic conditions are catching up with it.
As consumers become increasingly choosy about where they spend their money, they’re also keeping a tighter hold on gaming spending. Due to this, parents of Roblox users and adult users themselves are spending less on the platform’s premium currency. Of course, this cuts into Roblox’s revenue and bottom line, but it also underscores a broader issue with the metaverse.
The issue is that for users in a metaverse to generate currency for their virtual reality applications, they have to either make money in the real world and exchange it or spend time in the metaverse generating currency. Ultimately, they’re limiting their earnings in the real world. Thus, Roblox sits among metaverse stocks to sell until it adjusts its main revenue model.
Matterport (MTTR)
Though not directly targeting the metaverse industry, Matterport (NASDAQ:MTTR) has often received praise as a technological bridge to its expansion. These speculations often come from the company’s AR projects overlapping with the need for 3D spatialization in further metaverse expansion.
Currently, the company achieves this by using 3D mapping cameras to create digital twins of physical spaces. It then sequentially maps these spaces for users to virtually walk through them. As a result, Matterport’s services have become exceptionally popular with realty companies and developers. However, despite its genuinely innovative product, the company has struggled to achieve profitability.
Moreover, MTTR stock has seen a dramatic loss in value over the last five years, and with no meaningful progress, it’s unlikely the stock will ever return investors’ original investments. With CoStar (NASDAQ:CSGP) now set to acquire the company, it might be worth selling the stock after the sale goes through, as the MTTR acquisition price sits at a near 20% premium for $5.50 a share compared to its current $4.50 price.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.