Investors who are feeling a strange sense of déjà vu over January’s market sell-off are not alone. With tech stocks shattered, and CNN reporting Warren Buffett as ‘having the last laugh,’ a new era of tightening monetary policy has seen investors reassess outlandish growth prospects.
But this isn’t anything new. The best metaverse stocks can be more volatile than most; their valuations are usually based on future aspirations built on the foundations of cheap debt. But which stocks are the best to watch this month?
Impact Of Meta
One of the most well-known stocks is Facebook owner Meta Platforms (NASDAQ:FB). In fact, Chris Beauchamp, Chief Market Analyst at IG noted that:
"The Facebook rebrand has brought the metaverse concept to a wider audience, even if we perhaps don’t really understand all of it yet. With other firms cottoning on - it is clear that the idea and the principle of a whole new world of services and experiences does promise a new way to expand revenues. These could perhaps be into areas where previously it has been tough to fully exploit the opportunities available, e.g. the developing world."
However, it seems the company is quickly losing its edge with young investors. Last week, shares fell 26.4% after quarterly figures disappointed investors—a record daily slump for the company. But why the decline?
Shaun Murison, Senior Market Analyst at IG comments:
"With regard to Meta, the share price drop creates some negative sentiment within the tech space, which has been priced for growth, carrying rich valuations. The Meta decline is however initially on the back of weaker than expected earnings, which hasn’t been the case for a number of its peers Alphabet (NASDAQ:GOOGL) (Google), Apple (NASDAQ:AAPL), and Amazon.com (NASDAQ:AMZN).
"A further concern for the Meta share price is data share rulings in Europe. The company has suggested that it could pull its Facebook and Instagram apps from these jurisdictions. Alphabet has also had some restrictions imposed on its analytics systems, although this has been less pressing on the share price."
As the sudden fall of Meta Platforms catches some investors off guard, Leading financial source IG looks at the metaverse stocks tipped to perform well this month.
Best Metaverse Stocks
Charles Archer, Financial Writer at IG comments:
"With over a billion users worldwide, Docusign Inc (NASDAQ:DOCU) is an e-signature pioneer. Its share price hit $310 last September, representing a ten-fold increase over its Initial Public Offering price. But at $117 right now, it’s down 60% in the past six months. The metaverse stock fell hard after Q3 results, as CEO Dan Springer told investors that customers would ‘return to more normalized buying patterns’ when workers begin the return to offices. With the bar to beat expectations now so low, decent Q4 results could spark a recovery.
"Then there’s metaverse darling Roblox Corp (NYSE:RBLX), which shot up to $135 in November after its March IPO. But the online gaming company is down 44% over the past month to $58 a share, as broader concerns of interest rate rises begin to bite. However, the company has an edge over its competitors, as its user-generated content can respond rapidly to changing trends. And CEO Craig Donato believes ‘there’s an incredible amount of innovation’ needed to build the metaverse. Moreover, in Q3 results, revenue increased 103% year-over-year to $509.3 million, with average daily users up 31% to 47.3 million people. With collaborators from Nike (NYSE:NKE) to Paris Hilton, it’s a metaverse stock to watch if the recovery gets underway."
Which Metaverse Stocks Aren’t Performing Well?
"Meanwhile, fellow metaverse stock NVIDIA Corporation (NASDAQ:NVDA) is down 22% to $228 this month, as the market sell-off continues. But it’s still up 700% over the past five years. And this best metaverse stock just announced that it will be Meta Platform's (Facebook’s) primary partner as it begins to build the fastest supercomputer in the world. According to Meta CEO Mark Zuckerberg, the AI Research Supercluster will facilitate ‘experiences we’re building for the metaverse (that) require enormous compute power.’ And in Q3 results, NVIDIA Corporation posted $7.1 billion in revenue, up 50% year-over-year, driven by its best-ever gaming and data centre results.
"Moreover, this month’s survey from the US Commerce Department found ‘there is a significant, persistent mismatch in supply and demand for chips, and respondents did not see the problem going away in the next six months. Interestingly, a reversal of fortunes for these best metaverse stocks may become a February reality."