This virtual world, known as the “metaverse,” has the potential to revolutionise the way people interact socially and conduct business. Large and small tech companies are putting their own unique spin on the concept, which is only rivalled by the dawn of the internet in terms of financial opportunities.
Two prime examples are social media giants Snap (NYSE:SNAP) and Meta Platforms (NASDAQ:FB), which approach this opportunity in radically different ways. Along with their 2021 full-year earnings reports, both companies revealed some long-term prospects in February.
Here’s why, despite their divergent approaches, both stocks have the potential to grow your money fivefold by the end of the decade.
Why Meta Platforms Make Sense
In order to begin, let’s call attention to the obvious: Since Meta’s 2021 earnings report was released on February 2, the company’s stock has fallen by 27.7 percent. Apple and Alphabet’s recent changes to privacy rules for smartphones could cost the company up to $10 billion in 2022, according to the company, and investors were also concerned about the $10 billion loss in its Reality Labs segment, which is in charge of creating the metaverse..
Looking back on 2030, these may turn out to be short-term problems that resulted in long-term gains. According to some estimates, the metaverse could be worth $1.6 trillion by then, with a $800 billion value in 2024 and a compound annual growth rate of 13.1 percent.
Meta’s virtual world strategy may be similar to its social media platform strategy. As a result, it would have complete control over the entire ecosystem. Meta envisions a future in which its users will be able to “teleport” to other virtual worlds, where they can buy and sell digital goods.
Oculus, a company that makes virtual reality headsets, is also owned by Meta. As long as Oculus’ hardware is used as the primary method of accessing Meta’s metaverse, the company’s metaverse will no longer be subject to rule changes from third parties like Apple, which removes a major risk.
In order for Meta’s stock to rise 400% between now and 2030, it would need to increase revenue and earnings per share by 23% each year. All of this is based on the assumption that the company’s current earnings and sales multiples will not change.
Data is Derived From Meta Platforms
When you consider Meta’s ten-year track record and the growing metaverse opportunity, this stock may be a great place to put your money.
In the background, a cityscape is shown as a person points to two arrows that outperform the other.
Second, the Snap’s case.
While Meta Platforms has had a rough time of it this year, Snap’s parent company of popular social media platform Snapchat has had a much better time. Since its low point on February 3, when it reported its 2021 results, its stock price has risen by 71.4 percent. After years of living in Meta’s shadow, Snap claims it has recovered faster than expected from the privacy changes Meta is still struggling with, hinting that it is finally getting a win over its main competitor.
Although Meta is still worth ten times as much as Snap, Snap’s completely different approach to the metaverse gives it an interesting opportunity. Rather than concentrating on the immersive virtual reality, augmented reality is being developed. In contrast to virtual reality, augmented reality uses the user’s physical surroundings to enhance the digital experience.
Snap has created Spectacles, a pair of glasses that project digital content into the wearer’s field of vision as they go about their daily lives. They’re designed for this purpose. As a result, Snap thinks this approach is better for the user’s well-being because it encourages human interaction, and it also has the potential for greater adoption because it is far more practical.