Conversations about the metaverse began when Facebook shocked the world by rebranding to Meta. However, debates over “will people choose reality or virtual reality?” appear to have heated up in recent weeks. How long can a person remain in the metaverse? Will society ever get there?
On October 28, 2021, Facebook announced that it had changed its name to Meta. The name, according to the brand, represents the company’s expansion into the metaverse – a digital world in which people can live a parallel life to their real-world existence. The company is now attempting to create a platform under the Meta umbrella where users will be able to “socialise, work, learn, play, shop, and create” across various apps.
Meta users, according to Mark Zuckerberg, will be able to use products and connect with others virtually without having a Facebook account. The new name also distances the company from its association with the social media platform Facebook.
So, what is Metaverse?
Consider an interconnected, virtual world where anything you can imagine is possible. You can travel, play games, work, see, and interact with friends on the other side of the world. Most importantly, you can avoid reality. I’m sure “JAPA FC” will be overjoyed.
To put it simply, the metaverse is meant to be a more physical version of the internet. Instead of typing emails or messages to coworkers or making phone calls, you will log into the metaverse, where your avatar, a digital version of you, will be able to converse in a digital version of your office. Rather than playing video games by picking up keyboards or controllers or your phone and staring at a screen, you can move around and make your avatars play. That sounds great, doesn’t it?
The metaverse concept has long been the muse for science fiction writers, particularly Neal Stephenson, who coined the term in Snow Crash, his famous sci-fi dystopia from 1992. One of the most memorable recent depictions of the metaverse comes from Black Mirror, one of my all-time favourite shows. Whether you like the show or think it’s too dystopian, “San Junipero” is widely regarded as the best episode in its history. Two dying souls on Earth are uploaded to the cloud in the episode, where they live forever in virtual heaven. It’s one of the few episodes that ends on a positive note, and it sets the stage for an interesting discussion about the metaphysical nature of the metaverse.
That is the metaverse’s utopian goal: In an infinite manufactured playground, a pixel-perfect recreation of what human’s value most: love, friendship, and connection. The question remains, however, “Will society ever get there?” Do we really want to? And where are we now on that journey?”
Meeting in the Metaverse
Race to dominance….
Total metaverse land purchases reached $500 million last year, with predictions that they will reach $1 billion by 2022. With that money at stake, digital real estate firms have sprung up to capitalize on these new opportunities. You’ve probably heard about the world’s most expensive piece of digital real estate, which sold for an eye-watering $4.3 million last November. “Lol” digital land was purchased for $4.3 million. The first thing that came to mind when I saw this news was, “I will never be broke in my life.”
You should be aware of two major metaverse land investors:
Republic Realm has invested in 23 different digital landscapes.
Tokens.com. Tokens, based in Canada, is a publicly-traded company that owns a majority stake in The Metaverse Group. CEO Andrew Kiguel compares today’s digital land opportunity to purchasing Manhattan real estate 100 years ago. In late March, he plans to host a fashion show complete with a runway and VIP after-parties.
Meta (Facebook) too late?
The company is placing a large bet on the success of this concept. It is putting some of the world’s brightest engineering minds to work on this project, acquiring virtual reality and augmented reality companies, hiring over 10,000 people to work on it, and investing tens of billions of dollars in it. And Zuckerberg, who has ultimate control over his company, appears to be genuinely excited about it.
While the timeline is still unknown, it’s likely that we’ll all be using some yet-to-be-determined version of the metaverse to connect to the internet in the future. And Facebook is determined to play a major role in creating and shaping this new realm, which means that even if Facebook does not solely own the metaverse (as it has stated), it is still attempting to exert control over it. As a result, Facebook may one day wield even more power over our daily lives.
Meta (Facebook) a buy?
Meta Platforms (FB) shares plummeted in a never-before-seen epic meltdown. Following a weaker-than-expected earnings announcement, Meta’s stock plummeted by 26%, wiping out a record-breaking $237 billion from the company’s market capitalization. However, such a precipitous drop could be the result of a market overreaction.
At first glance, Meta’s earnings report did not appear to be all that bad. The company outperformed analysts’ consensus revenue estimates by $230 million. Revenues for the fourth quarter totaled $33.67 billion, a 20% increase year on year. On the EPS front, we saw a $0.16 miss, as Meta earned $3.67 in the quarter. The average revenue per user was $11.57, compared to the $11.38 predicted by analysts. The number of daily active users (DAUs) reached 1.93 billion, a 5% increase year on year. Analysts, however, predicted a slightly higher figure of 1.95 billion DAUs. Monthly active users (MAUs) were 2.91 billion, which was slightly lower than the expected 2.95 billion. In my opinion, there is nothing here that would justify a $237 billion market cap decline.
Meta’s Q1 guidance, on the other hand, is cause for concern. The company expects revenues in the first quarter of 2022 to range between $27 and $29 billion, while analysts predicted $30.27 billion. Meta’s Q1 forecast represents a 3-11 percent year-on-year growth rate. Naturally, the concern here is that Meta’s growth is slowing faster than expected, and that future revenue and EPS estimates may need to be revised lower. However, one quarter does not always make a trend, and Meta’s “slowdown” could be temporary.
Meta 5-year Chart
While Meta’s stock may trade sideways for some time, the downside risk is limited given the company’s current rock-bottom valuation. However, there is significant reward potential because Metaverse investments should pay off in the long-run