Should you invest in the metaverse or is it an overhyped buzzword to avoid?

According to the semiconductor company Nvidia (NASDAQ: NVDA)“The metaverse is one or more shared, interactive, immersive and collaborative 3D virtual worlds.” It’s a futuristic vision that has been a staple of science fiction for decades, and the prospect that technology has reached the point where it will soon be viable has captured the imagination of many investors.

But is the metaverse trend investable? That’s the question posed to Fool contributors Jon Quast, Travis Hoium and Charlene Rhinehart in this music video from Go behind the scenes of Motley Fool, recorded on January 6. Here’s what they had to say.

Jon Quast: Everyone’s favorite buzzword – especially if you’re a public company – and that’s “the metaverse”. At the Consumer Electronics Show again, many companies are launching new products that are designed to be more in augmented reality, virtual reality headsets. Think of them as your doorways, your gateways to what the metaverse is.

Real quick, maybe I shouldn’t take it for granted: do we all know what the metaverse is, what we’re talking about? Travis, how would you define the metaverse? I don’t want to put you on the spot.

Travis Houm: I think anyone who says they know exactly what the metaverse is is lying. [laughs] But it is this digital space that we will be able to be part of. I think we’re going to look back and say that this conversation we’re having right now is a cutting edge piece of the metaverse. But maybe in 10 years he will recognize our whole body, and we will be sitting in front of a [virtual] coffee table or something like that.

But I think that’s the way to think about it is that it’s these digital advancements that’s been going on for 30 years, it’s just moved into kind of an interesting different space where you can be embodied in AR, VR, other technologies.

Quest: Charlene, anything to add?

Charlene Rheinhart: I see this interconnected world of virtual communities, so instead of just looking at the internet, we’re actually inside the internet, and it could change the way we work, play, live, breathe, eat, because everything will be there.

Hoium: It’s much more concise. [laughs]. That’s what I was trying to say.

Quest: You both flirt with the same thing. It shows Nvidia defines it. It’s a shared virtual world where you can interact with each other, and you can buy and sell things, you can talk — all that stuff. It’s been the real buzzword ever since Facebook changed its name to Metaplatforms – really, that’s when it kind of hit a frenzy. And companies like panasonic, sonyTCL – they all launched new products at the Consumer Electronics Show, new headphones, new ways to access the metaverse. Rumors say that Apple is building its own headset, and this will be its next big thing, an Apple headset for accessing the metaverse.

My question for you here is, is this buzz or the metaverse actually investable right now? Because we’ve seen a lot of hyped things in the past that eventually came to fruition, but not how they were hyped, and they were never really investable by the time the buzz hit absolute frenzy.

Charlene, what do you think: is it investable?

Rhinehart: Metavers is very intriguing. Honestly, I thought it was just a fad, but as I see more and more companies entering this space, trying to claim their stake in this space, I’m doing more research. I actually have the Oculus Quest right now because I want to dive into the metaverse a bit and see what it’s all about. But it’s interesting to see that a lot of your top companies, those $1 trillion to $2 trillion companies, are making their way into the metaverse. Nike creates shoes and clothes in the metaverse. Then you have virtual concerts taking place in the metaverse. I also read an article about a couple who got married in the metaverse and paid for it with crypto. Now, it’s not yet legal to have a metaverse-only wedding. But it’s a very interesting concept. Is this the direction we are going after this pandemic? Are we more comfortable with this idea?

Right now what I’m doing is diving, personally, just to see what the fuss is about. I am also attentive to the movements made by these large companies. AmazonNvidia – I pay attention to what they are doing so I can figure out which direction I want to go in the metaverse. But it looks like it’s about to be another way for people to make money.

Quest: Travis, you have a list of overrated CES terms from yesteryear.

Hoium: I came back to…. Everyone is doing these articles about “Here’s what’s happening at CES this year.” These are only the last five or six years. We had curved TVs, 5G, electric scooters. The Internet of Things – it’s a bit like the metaverse to me: I don’t know exactly what it is, but we probably do. Drones, AR in 2018, VR in 2016, the smart home. Self-driving cars – this goes back to 2015. So a lot of these things happening today were topics at CES five or ten years ago. As Jon said, they don’t go as they were necessarily billed.

I think that’s one of the things we’re going to see with this metaverse concept is that companies like Meta are talking about it. I would bet that Meta will not be a leader of the metaverse in 10 or 20 years. It goes back to what I said earlier, because what they do is social media. They should basically say, “We’re going to ditch social media and focus on creating something completely different.” I think the companies that are going to dominate the metaverse are companies that we haven’t heard of yet or that are very small right now.

What I’m thinking about in the metaverse is: where are the infrastructure items? When you build a 3D world, whether it’s Charlene trying something in VR or buying an NFT [non-fungible token] which gives you access to an online world which is a small community. These things are usually built with Unity. So it’s an infrastructure game on the metaverse. Apple is another infrastructure game. Everything in metaverse, and Web3, and crypto, is built on the assumption that you already have a smartphone. No one builds their own new smartphone.

I think that’s the best way if you want to invest specifically in the metaverse right now is to think about the assumptions that are built on, and not necessarily who the winners are, because I don’t think those companies are probably still public.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice 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.

Comments are closed.