On Wall Street, reality may blur with the virtual, while investors search for top metaverse stocks.
The metaverse refers to a virtual world where users can interact, play and socialize in an immersive and interactive environment. With the rise of virtual reality (VR) and augmented reality (AR) technologies, the metaverse is poised to revolutionize the way we live, work and play. The segment is expected to grow at a compound annual growth rate (CAGR) of over 41%.
As the metaverse continues to evolve, investors are seeking exposure to the companies driving this innovation with cutting-edge technologies, platforms and experiences. From gaming and entertainment to education and healthcare, the metaverse has the potential to transform industries and create new growth opportunities.
Now, let’s delve into three top metaverse stocks to buy that are paving the way for a new era of immersive digital engagement.
Immersion (IMMR)
Immersion (NASDAQ:IMMR) is a leading innovator in haptics technology, which allows users to experience realistic touch sensations through digital devices. IMMR develops haptic feedback solutions across various industries. Those include mobile phones, automotive user interfaces and gaming peripherals. Their comprehensive portfolio enables manufacturers to integrate immersive touch feedback into their products.
The haptics technology innovator reported stellar financial results for the first quarter in April. Total revenue soared to $43.8 million, a dramatic 520% year-over-year (YOY) increase from $7.1 million. This robust performance significantly surpassed analyst estimates of $24.94 million. Net income climbed to $19.8 million, or $0.63 per diluted share, compared to $9.5 million, or $0.29 per diluted share, in the year-ago quarter.
Immersion inked significant licensing deals in the first quarter of 2024, solidifying its market position. A February agreement granted Meta Platforms (NASDAQ:META) access to Immersion’s haptics patents for their hardware, software, VR, and gaming products. This deal highlighted the growing role of haptics in the metaverse. Additionally, Immersion renewed its licensing agreement with Nintendo (OTCMKTS:NTDOY) in March, ensuring continued use of their technology in Nintendo’s gaming products.
As a result, IMMR stock has gained 38% year-to-date (YTD), reaching multi-year highs. Shares are trading at an attractive 8.2x forward earnings and 4.4x sales. Analysts have a 12-month price target of $10.50 for IMMR, signaling roughly a 10% upside.
Unity Software (U)
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Unity Software (NYSE:U) is a real-time 3D development platform where creators can build interactive experiences. In fact, Unity’s reach extends far beyond video games. It allows a diverse set of creators to develop VR applications, architectural visualizations and automotive design simulations as well.
Yet, the 3D platform developer recently reported mixed financial results. Total revenues declined 8% YOY to $460.4 million, yet beat analyst estimates by 6%. Diluted net loss per share widened 12% to came in at 75 cents, higher than anticipated.
In a move poised to revolutionize the in-cabin car experience, Unity and Mazda Motor (OTCMKTS:MZDAY) have recently forged a strategic partnership. This collaboration will leverage Unity’s development platform to create a next-generation human-machine interface (HMI) and graphic user interface (GUI) for future Mazda vehicles.
So far in 2024, U stock has plunged close to 50%, while the stock is currently trading at 3.7 times sales. Yet, Wall Street remains optimistic for the prospects of U stock with a price forecast of $26, an upside of 25%. Interested investors could regard declines below $19 as opportunity to initiate positions in U shares.
Roundhill Ball Metaverse ETF (METV)
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The last top metaverse stock is the Roundhill Ball Metaverse ETF (NYSEARCA:METV). This exchange-traded fund (ETF) is a pure-play for investing in businesses at the forefront of the metaverse market. These companies might be involved in hardware (VR headsets, haptic technology) and software development (game engines, 3D creation tools). In addition, networking infrastructure and even payment solutions that will facilitate transactions within virtual worlds enter the domain of the fund.
METV, which has 38 holdings, was launched in June 2021. The top 10 names make up about 50% of net assets of $406 million. In terms of sectors, we see gaming platform (22%) followed by computing components (19%), cloud solutions (14.9%) and video games (11.6%). About 70% of the companies are U.S.-based. Others come from China (8.7%), Japan (6.7%), South Korea (6.0%) and others. Leading holdings include Apple (NASDAQ:AAPL); Roblox (NYSE:ROBLOX), Nvidia (NASDAQ:NVDA), Meta, and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL).
Since January, METV has returned around 10%, and recently hit a 2-year high. Yet, the current valuation appears favorable with trailing price-to-earnings (P/E) ratio of 22.1x . Investors looking to capitalize on the next iteration of the internet can find the METV ETF a compelling option. Finally, potential investors should also note the expense ratio of 0.59%.
On the date of publication, Tezcan Gecgil did not have (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.
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