Depending on who you ask, the metaverse includes some form of virtual or augmented reality designed to bring users into the digital realm. In the digital realm, we can connect with other people for a variety of purposes, including leisure and commerce.
The final form of this new technology has not been fully fleshed out, but estimates of its potential value vary. Bloomberg Intelligence says the opportunity is worth $800 billion by 2024, and based on an annual growth rate of 13.1%, he could double to $1.6 trillion by 2030. I think.
meta platform (meta 0.25%) When snap (snap 4.24%) The two main developers of the metaverse, each approaching it from a different angle. This is why owning both is a big bet in the long run.
Meta’s multi-billion dollar bet
When the economy was booming in 2021, Meta Platforms’ big bet on the Metaverse was seen as an interesting investment in future technology that could change the way people connect socially and professionally. . The meta stock was trading at an all-time high of $378 just over 12 months ago.
But in 2022, with the economy slowing and the rest of Meta’s business struggling, investors have blamed the company and its CEO, Mark Zuckerberg, for continued spending on projects. did.
Meta Platforms is the parent company of Facebook, Instagram, and WhatsApp, all of which rely on advertising to generate revenue. However, given the current situation, as consumers spend less, companies are investing less in marketing, which has a direct impact on Meta’s portfolio of social media platforms.
The company posted revenue of $27.7 billion in its most recent third quarter (ending September 30). This was slightly down from his $29 billion achieved in the same period in 2021. While this isn’t ideal, investors are more concerned that Meta is accelerating spending in the Reality Labs segment responsible for the metaverse. In his first three quarters of 2022, Reality Labs lost his $9.4 billion. drag the company’s bottom line.
But it’s not all bad news. Meta continues to grow its user base across its app family and currently has his 3.7 billion monthly active users. The company’s 2022 annual revenue is expected to put him above $116 billion, which is flat compared to his 2021, but not necessarily bad given how tough the economy is. It doesn’t matter.
Then there is the economic potential of the metaverse. Considering the potential for a multi-trillion dollar opportunity in the long term, Meta’s investment of less than $10 billion this year doesn’t seem so unreasonable. Mark Zuckerberg predicts that the company’s mass-market virtual world could attract 1 billion users, each of whom will spend hundreds of dollars on digital goods by 2030.
Meta stocks have fallen 70% from all-time highs and are trading at their lowest prices price earnings ratio Now that it’s a public company, now might be the time to buy.
Snap is an extension of the metaverse
The beauty of new technologies like the Metaverse is that every company is working on their own innovative vision. SnapChat’s parent company, Snap, doesn’t look at virtual worlds at all, and in fact, rival Meta criticizes his platform’s approach. Instead, Snap wants to blend the digital and physical realms, and it’s using augmented reality (AR) to do so.
AR has wider applications as it does not require the user to be fully immersed in the technology, for example using a headset. You can use your smartphone’s camera to deliver on-screen, or you can use his special glasses designed by Snap called Spectacles. The wearer is able to go about their normal day with digital enhancements illuminating their vision without having to stop interacting with other humans in real life.
Like Meta, Snap’s ad-based business has been hit hard by the economic downturn this year.However, it is working on a series of initiatives to revive its growth trajectory, including AR-based features. it’s a true game changerseconds.
SnapChat users can try on clothes using AR through their smartphone cameras, and one retailer generated 11 million impressions on the platform in the third quarter. 14x return on investment by enabling users to explore outdoor furniture products using AR.
So, apart from the potential value generated from the metaverse itself, it’s clear that AR can offer advertisers a huge boost. Snap is the primary developer of this technology, so this could be a big long-term tailwind for the company.
Snap’s third quarter revenue grew just 5.7% year over year. For context, in 2021 at the same time he grew ten times faster (57%). Active users per day he reached 363 million, up 19% during the quarter. As long as that continues, Snap’s ad revenue should rebound significantly when the economy recovers.
Like Meta, Snap’s share price drop (about 87% from all-time highs) has pushed it closer to its lowest valuation since it became a public company, so investors should position at those levels. may find value in