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Investors Are Growing Increasingly Excited About The Metaverse. Here's Why.

Along with tech companies, brands like Chipotle (CMG) and Nike (NKE) have recently marketed their products in the metaverse.

For tech companies, entering the metaverse is proving to be a great move: Many investors are specifically looking to see which companies are taking an early plunge into the new virtual space that everyone's talking about.

In an article for the Wall Street Journal, GM Advisory Group's Director of Investment Strategy Frank Balas said that the wealth management firm is looking for companies that know how to capitalize on this online space. 

A combination of virtual reality, augmented reality and video, the metaverse refers to avatar-led virtual world being actively created by companies like Meta (formerly Facebook) and Microsoft ( (MSFT) - Get Microsoft Corporation Report).

"As the physical world integrates with the digital world at an accelerated pace, we want to be invested in companies that are best positioned to capitalize from this digital transformation," Balas said.

While the metaverse still feels like an abstract idea to many, some brands are trying to get an early entry on making themselves known to those who use the platform.

Along with tech companies, brands like Chipotle ( (CMG) - Get Chipotle Mexican Grill, Inc. Report) and Nike ( (NKE) - Get NIKE, Inc. Class B Report) have recently marketed their products in the metaverse.

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Some investors are taking things one step further and launching meta-themed ETFs. An ETF launched Fount Investment Co. Ltd. on the day that Meta changed its name now has more than $8 million in net assets.

Matthew Ball, a venture capitalist who launched the META ETF in partnership with Roundhill Financial Inc., said that "investors are excited about the theme." 

With stocks from companies like Roblox ( (RBLX) - Get Roblox Corp. Class A Report), Intel ( (INTC) - Get Intel Corporation Report) and Nvidia ( (NVDA) - Get NVIDIA Corporation Report), META ETF now has $800 million in assets and has risen approximately 11% in the last two weeks.

At the same time, much around the metaverse is still very new and more cautious investors may wait to know whether it will truly take off. 

The potential for an abstract idea for an online world that will morph into something  entirely different over time is also real.

"I think it’s very easy to get caught up in the hype of the metaverse, but what does it really mean in terms of cash flows to businesses at the end of the day?" Fidelity Investments portfolio manager Sonu Kalra told the WSJ.