- Roblox is one of the early movers in the metaverse industry.
- Unity has a solid base of developers who depend on the platform to power games.
The stock market correction has not been pleasant lately. What started with high-growth tech stocks has now spread to most companies. The reason for this is that geopolitical tensions have intensified, the risk of inflation is rising – and much more.
Although a market correction is uncomfortable, it offers long-term investors a chance to buy stocks of good companies. A smart idea might be to invest in the leading companies in the booming metaverse. Let’s take a look at two companies that should be among the winners in the virtual worlds of the Metaverse.
When people talk about the metaverse these days, they usually start with Roblox (WKN: A2QHVS). Roblox is one of the first companies to venture into the metaverse, and it’s one of the most successful. Young people around the world use the gaming platform extensively.
The popularity of the Roblox platform can also be seen in its numbers. Daily active users (DAUs) more than tripled, from 15.8 million in Q1 2019 to 49.5 million in Q4 2021. Reservations also more than quintupled over the same period, from 142 million to $770 million, driven by increased DAUs and increased spend per user. Additionally, the company has generated positive cash flow from operations in each of the past twelve quarters.
Roblox had had great successes in the past. But can the company continue to grow in the future? I think so. First of all, the Metaverse has become unavoidable. Technologies such as virtual reality and augmented reality are becoming more and more mature. Improved supporting infrastructure such as 5G connectivity, powerful chips, and low-cost computing will help propel the metaverse into the future.
In addition, large technology companies such as Metaplatforms, Microsoft and alphabet strong in this emerging industry. It is therefore difficult to imagine that it will not spread. Self JP Morgan expects the industry to generate $1 trillion in annual revenue.
As the top dog, Roblox already has a head start with around 50 million DAU (as of December 2021). Moreover, it has a community of loyal developers who have grown with the company. By creating better games, these developers will help Roblox attract new users and retain existing users. In turn, a growing user base motivates game developers to invest even more in developing high-quality games.
Bottom line: I think Roblox can maintain momentum through user base growth and innovative games. And as the metaverse industry evolves, the game company is well positioned to capitalize on potential new use cases in areas such as education, e-commerce, advertising, and more. It’s a company you can’t miss if you want to ride the Metaverse wave.
unit software (NASDAQ: AMD) is a game development platform that enables developers to create real-time interactive 2D and 3D content on almost any platform. This includes virtual reality and augmented reality devices.
While Unity offers a number of tools, the most important feature is the game engine. It is software for creating games. With the Unity engine, developers can now create their games at a lower cost and with a short development cycle. Unity also allows developers to power their games on the platform through hosting, client management, and monetization.
Game developers are pretty much locked into the Unity ecosystem, which makes it very difficult for them to switch vendors. Even if they change, the other choice is the Unreal Engine. This likely explains Unity’s high net retention rate, which dropped from 138% in 2020 to 140% in December 2021.
With a strong following in a limited market, Unity is well positioned as game developers head into the metaverse. After all, developers already know Unity, which knows their needs. Unity simply needs to innovate to meet those needs.
Additionally, Unity leverages its software capabilities to develop strategic partnerships with companies outside of the gaming industry. For example, the software vendor is partnered with Hyundai engine taken to improve the efficiency and productivity of the manufacturing process. Moreover, he cooperated eBay together so sellers can offer their customers an interactive 360-degree view of items for sale.
In short, Unity has strategically positioned itself to thrive in the growing Metaverse. And if investors have an opportunity to buy the stock during the correction, they should grab it.
The article These 2 metaverse stocks are in correction is a buy first appeared on The Motley Fool Germany.
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Lawrence Nga does not own any of the stocks listed. The Motley Fool owns shares and recommends Alphabet (A shares), Meta Platforms, Microsoft, Roblox Corporation and Unity Software, and recommends Alphabet (C shares) and eBay. This article appeared on Fool.com on 03/17/2022 and has been translated for our German readers.
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