With all the talk these days about artificial intelligence, investors may have forgotten about a technology trend that was gaining traction a few years ago: the metaverse. Obviously my interest has waned.
of metaverse is a collection of virtual worlds that individuals can “enter” to participate in various activities for social, entertainment, or productivity purposes. Although it’s hard to see the potential at this point, some companies are still focused on being at the forefront of this technology.
One such company is none other than the social media powerhouse. meta platform (meta -3.73%). It’s true that you’re investing a lot of money towards your goals, and the rewards could be huge in the future.
I think this is a monster Metaverse stock that investors should buy and hold for the long term. Here’s why:
new computing platform
Founder and CEO mark zuckerberg He made headlines when he reorganized the meta into two major divisions, one of which focused solely on Metaverse ambitions. The company sells AR/VR (augmented reality/virtual reality) headsets and sunglasses, while also developing software such as Horizon Worlds, which provides Metaverse use cases.
On the surface, this sounds like a tech mogul going crazy and working on a passion project just to kill time. But I think Zuckerberg’s focus on the metaverse is more calculated, and we should appreciate him a little more.
History is full of new computing platforms, the most recent being the proliferation of mobile devices. Zuckerberg is trying to make Metaverse the leader if it becomes the next big platform. This makes sense both financially and strategically.
In the era of smartphones, applefor iOS, and alphabet, Android gives you a competitive edge by giving you control over the mobile operating system. If Metaverse adoption does become widespread, the Meta platform could become the primary on-ramp service provider, which could generate significant revenue.
Of course, there is a long way to go before this becomes a reality. Zuckerberg says he wants to reach his 1 billion Metaverse users, but adoption has been slow. In the most recent quarter (Q3 2023, ending September 30), sales were just $210 million, less than 1% of the company’s total. The division has been losing money, posting an operating loss of $11.5 billion in the first nine months of 2023, after posting a $13.7 billion operating loss for all of 2022.
I’m sure many metabears are very skeptical of where Zuckerberg’s attention is going these days. But the company is making bets where it sees fit for long-term success.
unlimited financial resources
What gives Meta a big advantage is its abundance of resources to invest in new projects that can be characterized as high uncertainty but may be needed to keep the business ahead of the curve. There are options. The company’s balance sheet has $61 billion in cash, cash equivalents, and marketable securities. These financial resources will be the fuel to support the promotion of the metaverse, giving small businesses the edge they desire.
And these impressive numbers show just how lucrative the company’s social media apps are, and remain Meta’s crown jewel segment. Facebook, WhatsApp, Instagram, Messenger, and the newly launched Threads, which generated $33.9 billion in revenue and his $17.5 billion operating profit in the third quarter, are the real stars of this show. The user base continues to grow even as monthly actives reach his nearly 4 billion.
Once the economy is back on solid footing and marketing executives have a more positive outlook, Meta will prove once again how successful it can be when the digital advertising market begins to recover. The company’s popular apps have garnered a lot of attention and remain a major revenue driver.
moving forward stock price earnings ratio At just 22.1, this stock is a no-brainer buy for anyone looking for a safer way to experience the potential of the Metaverse.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Neil Patel and his clients have no positions in any stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Meta Platform. The Motley Fool has a disclosure policy.