Metaverse stocks are continuing to gain popularity. Given the broad context with which we can refer to the metaverse, more and more potential stock options are opening up. Depending on how direct or indirect exposure we’re looking to take to this new space, we can toggle the risk. As a general rule of thumb, the stocks directly relating to the metaverse are higher risk than those that have diversified revenue streams, with only one of them being related to the metaverse.
Lower risk metaverse plays
One example is Sony (NYSE:SONY). The business has core revenue lines from the likes of PlayStation consoles, music and consumer electronics. In the quarterly results for the period ending September, it generated a whopping JPY 318.5bn in operating income. Although this figure was only up 1% on the same period last year, I appreciate that it’s a mature business that has already reached scale.
How does this tie into the metaverse? Well Sony happens to be on the main producers of VR headsets. Although this ties in with the PlayStation, it’s clear that the quality of audio and visual will be able to be extended for other projects in the VR space.
Therefore, we like this as a metaverse stock that doesn’t carry a high level of risk. If the VR headsets really take off, then the Sony share price should appreciate. However, the behemoth of the electronics world will be able to cope if this doesn’t happen. We think this limits the downside risk, while still capturing some upside potential.
Higher risk, higher reward?
Another option worth considering is Unity Software (NYSE:U). It’s a game development software, which on the face of it is nothing special. However, what does make it special is that it markets itself as “the preferred platform for creating VR experiences”.
Given that the company has recently bought Weta Digital, we think that it can back up these claims in the future. For those that don’t know, Weta is the digital company behind some of the special effects of Game of Thrones and Avatar. It’s clear that the company knows what it’s doing, and does it well.
As a top metaverse stock, we’re eyeing up Unity as a share that could see some good upside in 2022. This is a higher risk move that Sony, given that all of the business is focused around gaming software and programming. But with this could come higher upside rewards.
Overall, we think that there are some great metaverse stocks out there as we start out in January. Depending on the risk appetite, different options can be explored.
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