2 unstoppable metaverse stocks that could double, according to Wall Street

The important points

  • The Meta Platforms metric is well below that of the Nasdaq 100 index, suggesting the stock has significant upside potential if it rallies.
  • Snap’s revenue has grown 10x since 2016, and analysts believe its comeback is imminent.

Social networks in the digital world have grown rapidly over the past 15 years. What started on our computer screens quickly made its way to our smartphones, allowing us to connect with family, friends and colleagues anywhere, anytime.

The next level of this networking is now being developed. Dubbed the Metaverse, it is one or more virtual worlds accessible through immersive devices, taking users to the next level of digital social networks and enabling far more interaction than is currently possible.

It is estimated that this exciting technology could be worth up to $1.6 trillion per year by the end of this decade. This is a huge opportunity for innovative companies growing the metaverse, and many new entrants are vying for a competitive edge. Wall Street is betting that these two stocks could be at the forefront of this new competition.

1. Meta-platforms: predicted price increase of 132%

Meta Platforms (NYSE: MET), formerly known as Facebook, is by far the leader in the social media industry. With over 2.9 billion monthly active users, the company is arguably best positioned to create the next generation of digital social life. And meanwhile, investors are profiting from highly profitable stocks like Instagram, WhatsApp and Facebook.

But things haven’t been going so well lately. Meta Platforms’ share price is down 41.2% since the company released its full-year 2021 results on Feb. 2. Meta is grappling with iPhone maker Apple’s (NASDAQ:AAPL) -2.56% user privacy changes that affect Meta’s ability to target ads to specific users. Meta estimates the changes could lead to $10 billion in lost sales in 2022, which worries investors.

Meta’s Reality Labs division, which develops the metaverse, also caused a stir after reporting a $10 billion loss in 2021. But given the vast opportunities on offer here, that could turn out to be a drop in the bucket. the ocean over time. Meta is trying to lay the groundwork for this technology, which could give the company control (and pricing power) over the transactions that take place there. Owning the ecosystem in this way could be a huge financial gain, especially once the metaverse has its own digital economy.

This brings up an important point: analysts expect Meta to generate $132 billion in revenue by 2022, representing a compound annual growth rate of 38% over the past decade. Simply put, the company is a financial powerhouse, and its investments in reality labs to date certainly won’t break the bank.

Given the stock’s steep decline, Meta Platforms now trades at a price-earnings multiple of just 14, based on earnings per share of $13.77 in 2021. That’s 55% lower. than the tech-heavy Nasdaq 100 index, meaning Meta stock would need to more than double to catch up with the broader tech sector.

This is exactly what Wall Street investment bank UBS Group expects. She has a price target of $440 on Meta Platforms shares, which represents a potential upside of 132% from the current price.

2nd Snap: Anticipated 210% price increase

Snap (NASDAQ:SNAP, -5.96%) is another big social media player that’s leaning into the metaverse, albeit with a twist. Snap is the parent company of the Snapchat platform, which has a strong focus on camera technology to enhance user experience.

Unlike meta-platforms, which develop virtual reality (VR) technologies as the basis of the metaverse, Snap develops augmented reality (AR) technologies. While virtual reality completely immerses the user in the digital world, augmented reality weaves digital technologies with the physical world to augment daily efforts.

A VR headset confines the user to a single physical space, while Snap’s Spectacles glasses are designed to be worn anywhere and project digital experiences into the user’s field of vision. Snap believes this encourages human connection rather than further isolating users, which has been one of the main criticisms of increasingly popular social media platforms. But it’s also a big plus for the business, because wearable technology that can be used anywhere is much more convenient and could drive adoption.

Here and now, 2021 has been one of Snap’s best years. It was finally showing signs of beating its main social media competitor, Meta Platforms, as it appears to have managed to find a solution to the privacy changes at Apple that Meta is struggling with.

Snap generated record revenue of $4.1 billion this year, a tenfold increase from 2016, and leading analysts are predicting that 2022 could be the company’s first year to turn a profit.

Credit Suisse is one of the most bullish banks on Wall Street when it comes to Snap shares. She is betting that the stock price could rise 210% to $93 per share. If Snap’s approach proves successful for the next generation of social media, that could be a conservative long-term goal.

The article 2 unstoppable metaverse stocks that could double say Wall Street first appeared on The Motley Fool Germany.

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This article represents the opinion of the author, which may differ from the “official” endorsement position of a high-end Motley Fool consulting service. Challenging an investment thesis, even one of your own, helps us all think critically about investing and make decisions that help us be smarter, happier, and wealthier.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool.

The Motley Fool owns stock and recommends Apple and Meta Platforms, Inc. The Motley Fool recommends the following options: long calls on Apple in March 2023 at $120 and short calls on Apple in March 2023 at $130.

This article was written by Anthony Di Pizio and was published on Fool.com on 03/14/2022. It has been translated so that our German readers can join in the discussion.

Anthony Di Pizio does not hold any of the shares mentioned.

Motley Fool Germany 2022

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