Despite enthusiasm from Mark Zuckerberg that ultimately led to the rebranding of Facebook into Meta (NASDAQ:META) in late 2021, the metaverse’s time in the limelight was short-lived before a generative artificial intelligence (AI) boom in 2023 drove investor sentiment elsewhere.
Another confounding factor surrounding metaverse hype was the primitive technology being showcased as a “groundbreaking” development for future collaboration and entertainment. Much attention was given to Mark Zuckerberg’s metaverse announcements for Meta’s Horizon Worlds, and the rudimentary graphics showcased drew derision from many onlookers.
However, the metaverse’s chequered reputation shouldn’t detract from what’s set to become a $1.3 trillion opportunity by 2030, according to Markets and Markets global forecasts. This represents a compound annual growth rate (CAGR) of 48% on the $83.9 billion market size as per revenue recorded in 2023 and illustrates a landscape that’s ready to go from strength to strength.
Many key players believe that the early breakthroughs in the development of the metaverse will be in gaming, and the coming years will provide a backdrop for early battles between key stocks to make the biggest impression on the market. These three stocks already have the wheels in motion to become the stars of the metaverse gaming landscape in the coming years:
Microsoft (MSFT)
As the world’s most valuable stock, Microsoft (NASDAQ:MSFT) has a proven track record of success through a whole host of its endeavors. Recently, Microsoft has developed a series of metaverse-focused products and services including Microsoft Mesh, AltspaceVR, HoloLens, Azure Spatial Anchors, and Gaming and Xbox.
However, Microsoft’s biggest statement of intent for metaverse gaming came during its 2022 acquisition of gaming giant Activision Blizzard for $68.7 billion.
“Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms,” explained Satya Nadella, chairman and CEO of Microsoft.
“We’re investing deeply in world-class content, community and the cloud to usher in a new era of gaming that puts players and creators first and makes gaming safe, inclusive and accessible to all.”
What’s more is that Microsoft’s stock has experienced a positive first quarter of 2024, with more than 15% growth recorded throughout the year so far. The stock’s excellent market position and commitment to innovation make it a key consideration for investors seeking to buy into the burgeoning metaverse gaming landscape as a long-term play.
Roblox Corp (RBLX)
As one of the most complete iterations of the metaverse in the world of gaming today, Roblox (NYSE:RBLX) has been a driving force in the industry. With a strong in-game ecosystem that offers in-game currency, ‘Robux,’ to creators that can be converted into fiat currencies, the game takes the form of a robust content-sharing platform.
Additionally, Roblox has seen some major collaborations occur within its metaverse, with brands like Nike (NYSE:NKE), Sony Music, and Gucci all establishing their own worlds on the platform as a means of building new interactions with its 49.5 million daily active users (DAUs).
Although it has a strong market position today, Roblox hasn’t been without its challenges of late. The platform missed analyst estimates for Q4 2023 earnings, triggering a stock market slide in Q1 2024.
Reported DAU growth of 33% on a year-over-year basis, and a 28% increase in engagement hours softened the blow, but the company’s reported $568.8 million quarterly revenue and generally accepted accounting principles (GAAP) losses of 0.25% per share were worse than expected in terms of earnings and revenue.
While this has led to some market volatility for the stock, Roblox’s price-to-sales ratio remains relatively strong and could offer investors around 40% upside in a three-year time frame–provided that there are no major challenges for market dominance on the horizon.
Unity (U)
Another stock that’s had to endure short-term volatility is Unity (NYSE:U). As a global market leader in the creation and operation of real-time 3D content, Unity is a firm that’s well-positioned to be a driving force in the metaverse gaming boom.
However, the stock has struggled to find momentum so far in 2024. To make matters more convoluted, Unity’s strong Q4 2024 earnings, which saw revenue rise and expectation-beating 35% year-over-year to $451 million, was significantly inflated by the firm’s shutdown of Weta Digital due to the release of deferred revenue during the quarter.
Without this factor, Unity’s revenue fell 2% year-over-year, and this disappointing decline has been underlined by the stock’s Q1 2024 losses of over 25%.
Despite this, investors may see recent declines as an opportunity to pick up a high-potential stock at a discounted rate. Unity’s Q4 2023 performance saw the firm narrow its net losses from $299 million to $254 million, and although this also missed forecasts it still represents a push towards long-term sustainability.
Backed by a strong balance sheet, Unity is set to be a stock that holds plenty of value for investors who believe in its role in the metaverse gaming boom in the coming years. However, short-term volatility could still seep into the firm following the difficulty it faced in a challenging Q4.
On the date of publication, Dmytro Spilka did not hold (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.