The metaverse became a hot topic last year as speculative investors rallied over the potential building of a sprawling VR world backed by cryptocurrency. cryptocurrencies and decentralized apps But during the past year That enthusiasm fizzled when high-profile efforts like meta platform‘ Horizon World and good centraland spit out
Rising interest rates and other macroeconomic trends have made investors more cautious. And the market doesn’t seem to want all the metaverse-related stocks, even in a downturn. Investors should consider buying these three stocks that have limited exposure to the metaverse within their larger businesses.
Autodesk (APSK) -0.88%) It is best known for its AutoCAD computer-aided design and drafting software, but also offers a wide range of cloud-based software for architects, engineers, makers, and media professionals. Many of the key tools used to create digital worlds within the metaverse can be found in Autodesk’s portfolio.
Autodesk’s Maya, 3ds Max, Mudbox and Motionbuilder applications are all used to create 3D animation and special effects for video games, TV shows, movies and VR software. , a building modeling tool, to Epic Games’ Twinmotion 3D visualization software platform. It enables professionals to collaborate on real-time 3D models.
Autodesk stock is down about 30% this year as investors fret over cooling growth. Revenue is expected to grow 14% this year, compared to 16% growth in fiscal 2022 and fiscal 2021. Analysts expect only 10% growth in fiscal 2024, blaming slowing macro factors and the pandemic, which are the ingredients. higher of short-term contracts that offer lower upfront payments Geopolitical Challenges in Russia and currency fluctuations
However, Autodesk remains profitable. The net income retention rate remains comfortably above 100%, and its stock is reasonably valued at 27 times forward earnings. Investors who want a balanced play on the metaverse, including exposure to mission-critical architecture, engineering, and manufacturing. should take a closer look at this stock
Japanese group Sony (Sony -0.38%) It also expanded into the metaverse through its gaming division, which generated 26% revenue and 12% operating income in its most recent quarter. Popular multiplayer games on the PS5 are the beginning of the metaverse, but Sony is also expanding its presence in the VR market with its PSVR headset, which ties into PlayStation consoles and encourages game developers to add additional VR features.
The first version of PSVR, released for PS4 in 2016, sold about 5 million units through early 2020. Sony plans to release the second generation PSVR 2 in February 2023. The new headset will cost $550. Compared to the $400 launch price for the original device. That price tag seems steep. Especially since the PS5 costs $500, but Sony’s decision to move forward with a new headset suggests that it still sees bright days ahead for the VR market and the metaverse market.
For other Sony businesses, including movies, music, consumer electronics, and image sensor department They are recovering in the post-pandemic market. It expects revenue to grow 17% this fiscal year. But as for net revenue, it will drop 5% due to selling higher-margin first-party games. Licensing fewer shows and movies to streaming media platforms. And explore the hard, windy currency. That said, Sony still looks incredibly cheap at 16 times forward earnings.
Finally apple (A.P. -1.46%) It is expected to enter the metaverse next year with a mixed reality (MR) headset that combines augmented reality and virtual reality features. Little is known about this device yet. But recent rumors suggest it will be lighter and more powerful than Meta’s current Quest headset.
Apple often destroys markets it didn’t create. Widely known for making MP3 players, smartphones, tablet computers. and smartwatches are popular. But it only came into those areas after other companies tested the market first. If Apple does the same with MR headsets, it could become a new revenue stream that will differentiate its business from the iPhone (47% of sales). in the latest quarter) while connecting more users to the service ecosystem.
If Apple’s upcoming headset is gaining enough momentum It could become the foundation of its own metaverse. The new computing platform will allow Apple to launch more apps and subscription services beyond the core iOS, macOS, watchOS and Apple TV platforms.
That’s all speculation right now. But Apple’s core business still has its own flexibility. Analysts expect the company’s revenue and earnings to grow 3% and 2% respectively this year. The 5G upgrade cycle ends in 2021 and then accelerates in 2023 as new products and services are launched. The company’s stock is reasonably valued at 22 times forward earnings. And $169 billion in cash and marketable securities make it a safe technology stock to hold. Because rising rates will punish illiquid companies.
Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Leo Sun holds positions at Apple and Meta Platforms. The Motley Fool sits on and advises. Apple, Autodesk, and Meta Platforms The Motley Fool recommend the following options: March 2023 $120 Long Call on Apple and March 2023 $130 Short Call on Apple. The Motley Fool has a disclosure policy.