The metaverse is being viewed as the next key step for internet and gaming, according to a note by analysts at Wedbush.
The wrote in a note this week that the value of data so far collected by social media companies and its democratic ownership is powering a new, virtual world.
“A successful Metaverse upends the economics of data generation, with users empowered to profit from their own digital assets to the detriment of the world’s largest digital asset aggregators, including the social media companies,” Wedbush analysts Michael Pacte, Nick Macay and Junaid Zubair wrote in a note to investors.
It said the metaverse will allow users to create digital assets like non fungible tokens with added financial incentives.
“Each user is financially incentivized to create more NFTs in a create-to-earn business model, with increasing levels of creation expanding wallets and enhancing the experiences of the broader Metaverse’s population,” the note added.
“Payment systems that enabled users to cash out their in-game currency into real world money will be essential to the future growth of the various virtual worlds,” the note added.
The concept itself has the potential to drive many winners through “open sourcing of digital assets and the recognition of property rights” that will result in the wealth that is created spreading across the metaverse.
“As such, do not expect just one winner, with numerous outlets supported by the varying interests of the broader population,” Pacte said.
Videogame publishers like Epic (EPIC) and Unity Software (U) – Get UNITY SOFTWARE, INC. Report will need to invest additional resources into their own virtual worlds to offset modest revenue attrition.
“Payment systems that enabled users to cash out their in -game currency into real world money will be essential to the future growth of the various virtual worlds
Morgan Stanley also sees the metaverse as an $8 trillion addressable market which is likely to become the “next generation social media, streaming and gaming platform.”
The investment firm picked Meta, Roblox (RBLX) – Get Roblox Report, Alphabet (GOOGL) – Get Alphabet Inc. Class A Report, Snap (SNAP) – Get Snap, Inc. Class A Report, Unity Software among other stocks it thinks can benefit from growing adoption of the metaverse concept.
Sean Sechler wrote for TheStreet that while Meta, formerly Facebook (FB) – Get Facebook, Inc. Class A Report, might seem like the obvious pick to invest in the metaverse, Roblox is another up-and-coming company that stands out as a metaverse stock with similar upside potential.
For Meta Platforms, the metaverse is a $10 billion project to transition Facebook from its much-criticized social network and related family of apps and into what founder Mark Zuckerberg has called an “embodied internet.”