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Want to Buy Metaverse Stocks? How About Some AMZN?

Amazon could be about to make its move into the metaverse industry. Here's how the e-commerce titan might benefit from the digital universe.

When thinking about metaverse stocks to invest in, the first companies that come to mind are probably Apple  (AAPL) - Get Apple Inc. Report, Nvidia  (NVDA) - Get NVIDIA Corporation Report, Roblox  (RBLX) - Get Roblox Corporation Class A Report, and, of course, Meta  (FB) - Get Meta Platforms Inc. Report itself. Amazon  (AMZN) - Get Amazon.com Inc. Report, on the other hand, might pass under the radar. But it's still a promising bet.

The metaverse is the new digital "promised land." And the e-commerce titan’s strategy involves moving into any industry in which it sees an opportunity to strengthen its flywheel. In this case, should investors buy AMZN now, before the market considers it a metaverse company?

Figure 1: Want to Buy Metaverse Stocks? How About Some AMZN?

Figure 1: Want to Buy Metaverse Stocks? How About Some AMZN?

(Read more from Amazon Maven: Three Bullish Arguments for the Future of AWS)

Amazon Is About to Make a Run for the Metaverse

Rumors suggest Amazon’s plans for its metaverse project are already in motion: The Street’s author Vidhi Choudhary has recently published that Amazon is hiring a senior product manager for Lumberyard, a gaming engine developed by AWS. The job description states that the position will “own the delivery of cloud-based metaverse services.”

Choudhary argues that Amazon may be trying not to call attention to its metaverse ventures yet, which seems to make sense. The company’s MMORPGs have shown satisfying results, but they're still too modest to place Amazon on the list of major game publishers. The company is probably remaining cautious before announcing its move into a new industry — especially a game-related one.

Strengthening the Flywheel

For years, Amazon has been building an ecosystem revolving around its e-commerce strategy. The company has its own video, music, and audiobook streaming platforms, multiple gadgets available for purchase on its marketplace, one of the largest logistics chains in the U.S., and even a game publishing division.

The metaverse games are likely to be one more segment to complement Amazon’s long-term strategy to lock consumers into the company’s platforms. They will also add value to existing Prime members.

If that is really the case, Amazon might have a considerable advantage compared to its other metaverse competitors. The ecommerce titan could be able to leverage its nearly 150 million U.S. Prime members to deliver its metaverse products, which would guarantee its dominance right in the early stages of this new market.

Other Meta Stocks

Seeking Alpha’s Bradley Guichard has listed his top metaverse stocks for 2022. As we look at the 2022 performance of Roblox, Matterport  (MTTR) , and Unity Software  (U) - Get Unity Software Inc. Report, we may realize “metaverse pure” stocks are still highly volatile. Their capacity to generate cash flows is tied to future expectations and, because of that, they are more vulnerable to speculation.

Figure 2: Roblox RBLX, Matterport MTTR, and Unity Software U performance.

Figure 2: Roblox RBLX, Matterport MTTR, and Unity Software U performance.

Still, among his seven picks, three are from the FANGAM group (Apple, Microsoft and Meta). This suggests the "Big Tech" companies will play a big role in building the metaverse industry. If we can extend this conclusion to Amazon, buying and holding these Big Tech stocks seems to be a very reasonable way to get exposed to the metaverse while also balancing our investment risk. 

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Amazon Maven)