With tech giants like Meta, Google, and Microsoft getting involved and analysts predicting the industry could be worth $8 trillion, the “metaverse” should be on every growth-seeking investor’s radar.
However, despite the fact that this nascent sector has received plenty of media attention in recent years it’s still too obscure for the average investor. The best way to bet on this sector’s future isn’t exactly clear.
If you’re looking to add exposure, here are three potential strategies you could adopt.
Digital real estate
Blockchain-based virtual worlds like Sandbox and Decentraland are probably the most successful metaverse products so far. These virtual worlds are divided into land parcels that can be purchased and rented out just like traditional properties. In December 2021, one parcel of land in The Sandbox sold for a record-breaking $4.3 million.
Buying virtual land directly is, perhaps, the most straightforward way to bet on this industry. However, you could also buy funds that own and manage a portfolio of virtual real estate. MetaSpace Real Estate Investment Trust (MREIT) is a good example of this.
Land isn’t the only form of property you can buy in the metaverse. A new crop of blockchain-based games have successfully created microeconomics and marketplaces for in-game digital goods. In other words, all the playable characters, outfits and tools you’ll need in the game can be traded as non-fungible tokens (NFTs). You can buy and hold or even rent out these NFTs for passive income.
This strategy is popular in games like Axie Infinity. The developers introduced a game scholarship program that allows wealthy investors to purchase a portfolio of Axies (playable virtual pets) which can be rented out to other players on a short-term basis. Renters use the Axies to win battles and build credit so that they can own their own Axies soon.
This makes in-game NFTs an investment opportunity.
Stocks or ETFs
Buying virtual land or playable characters is a little technical for most investors. If you prefer a traditional approach, you could bet on stocks that enable the metaverse. Unity Software (NYSE: U) is a great example. Their game development engine powers some of the most popular virtual worlds and entertainment properties. Niantic’s Pokémon Go, TakeTwo’s Among Us franchise, and games in Facebook’s Horizons virtual world are enabled by Unity’s sophisticated game engine.
Nvidia (NASDAQ: NVDA), Roblox Corp. (NYSE:RBLX), NVIDIA Corp. (Nasdaq:NVDA), and Snap Inc. (NYSE:SNAP) are also potential metaverse plays for investors watching this sector.
Alternatively, you could bet on an exchange-traded fund that tracks the broader sector. Roundhill Ball Metaverse ETF (NYSEArca:METV) has assembled a portfolio that offers a convenient way for retail investors to add metaverse exposure to their portfolio.
As the industry expands there could be more ways to invest in it. For now, these stocks, ETFs, land parcels, and playable NFTs are your best bet.