Metaverse trends are predicted to be one of the hottest growing trends of the decade, with some research groups predicting that the global market size could grow from hundreds of billions of dollars to over $1 trillion by 2030. I predict. meta platform (meta -2.71%) In 2021, we aim to fully engage the metaverse trends and become the main beneficiary of this seemingly large opportunity.
Some investors believe Meta Platforms’ stock is currently undervalued and will become more attractive as the metaverse grows. But CEO Mark Zuckerberg said his seven words that bring much-needed perspective to conversations.
Commentary on “Valley of Illusion”
Building an immersive, interactive digital world in the Metaverse is a futuristic vision. But he was the one that public companies and investors were immediately hooked on in 2021. For example, according to GlobalData, the Metaverse was not mentioned at all during the third quarter of 2020 public company conference call. In the fourth quarter of 2021 he was 119. This is a big leap.
To put it simply, the Metaverse buzz exploded. And this is what bothers Zuckerberg.in a recent episode decoder On The Verge’s podcast, Zuckerberg said that die-hard fans of the Metaverse could quickly fall into “valley of disillusionment.”
Business performance is measured in years and decades, not weeks and months. Many of us can recite the famous words of the great investor Warren Buffett. Practicing patience, however, is harder than many of us realize.
Meta Platforms stock price has fallen 60% since announcing its name change on October 28, 2021. Some shareholders must be wondering how a potentially trillion-dollar opportunity led to such a collapse. But to go back to Zuckerberg’s seven words, “it’s a vision far ahead” if the Metaverse is ultimately worth pursuing.
What to do with Metaplatform stocks
Talk to one of the elephants in the room. Meta Platforms stock is cheap. With a price-to-sales (P/S) ratio trading below his 3, the stock has never been this low. What’s more, the price/earnings ratio (P/E) is just 10.6. that is, S&P 500According to Yardeni Research, this is 21.4.
META PS Ratio data by YCharts
Revenues would be higher and valuations would be even lower if Meta Platforms hadn’t pursued its metaverse ambitions. The company analyzes metaverse metrics in its Reality Labs segment. Reality Labs said that in 2021 he will have an operating loss of $10.2 billion and in the first half of 2022 he will have lost $5.8 billion.
Recent reports from wall street journal suggests that Meta Platforms are starting to be more disciplined when it comes to spending. But the point remains. The company has spent billions of dollars pursuing its Metaverse ambitions, but payment, if any, is years away.
How long does it take? Returning to the interview, Zuckerberg said: Ten years – Also no matter how long it takes: By building this next generation of computing, we are able to fundamentally focus on people and give them this presence to make them feel like they are with another person. ” [emphasis added]
Meta Platforms has one of the top virtual reality (VR) hardware platforms with Oculus devices. The company’s Facebook and Instagram apps also offer robust cash flow that can be invested in developing other metaverse components, more than most companies on the planet. So if any company is poised to profit long-term from the Metaverse, it’s the Meta Platform.
However, I am personally not comfortable with buying Meta Platforms stock. For me, it’s not of interest to my portfolio. If I’m going to be more speculative, I’d rather invest in smaller caps rather than something like Meta Platforms, which has a market cap of over $340 billion.
This does not mean that meta platforms are necessarily bad buy-and-hold investments. Perhaps you are personally very optimistic about the future of the metaverse. If so, you can’t miss Meta Platforms. However, it should be noted that not everything will happen overnight. It may take ten years or more. And recognizing this upfront can help keep you out of the Valley of Disillusionment.
Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. John Quast has no positions in any of the stocks mentioned. The Motley Fool holds positions with and recommends Meta Platforms, Inc. The Motley Fool’s U.S. headquarters has a disclosure policy.
