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Tech Stocks Roundup: The Battle for the Metaverse — Let the Games Begin

Check out the latest news and performance numbers from the top technology and FAANG/MAMAA stocks like Amazon, Apple, Meta, Netflix, Google, Microsoft and more.

Apple  (AAPL) - Get Apple Inc. Report reportedly is preparing to take on its biggest tech rivals in a bid to conquer the metaverse, the virtual world that appears to be a new reality. And, the fight is on. May the odds be ever in the tech giants' favor. 

A key element in the computer giant's arsenal will be its AR/VR headset. Analysts have been predicting that the headset will cost around $3,000, while Bloomberg said Apple has discussed price points above $2,000.

At this price, it will be one of the most expensive virtual reality headsets on the market. However, Apple has reportedly run into some real-world delays on its way to the metaverse.

The headset was targeted for an unveiling at Apple’s annual Worldwide Developers Conference in June, followed by a release later in the year. But development challenges related to overheating, cameras, and software have made it harder to stay on track.

Last week, the Wall Street Journal reported that investors and analysts are talking up Apple’s potential to exploit the metaverse. Chief Executive Tim Cook has said it will be vital for the company’s future.

The biggest names in the tech sector are fighting to take over the metaverse as Apple, Microsoft  (MSFT) - Get Microsoft Corporation Report, Facebook parent Meta Platforms  (FB) - Get Meta Platforms Inc. Class A Report, HTC and Sony  (SNE) - Get Sony Corp. Report invest in hardware interfaces to pair with platforms they are building. And, Google parent Alphabet  (GOOGL) - Get Alphabet Inc. Class A Report is working on augmented reality eyeglasses. 

Microsoft’s recent acquisition of embattled video gaming company Activision Blizzard  (ATVI) - Get Activision Blizzard, Inc. Report is a good move for the software behemoth, argues Real Money contributor Stephen “Sarge” Guilfoyle. Microsoft CEO Satya Nadella’s insight into what direction the company should move in has always been impressive, he wrote recently. The $68.7 billion all-cash deal would give Microsoft a larger gaming offering since Activision offers "Call of Duty," "Warcraft," and "Candy Crush."

Nadella, said in a news release that gaming “will play a key role in the development of metaverse platforms,” though what exactly that means is currently unclear.

As more and more people become aware of the virtual reality world the metaverse, there’s an increasing sense that the public isn’t exactly sure what this all means for them, as the idea, put forth by Facebook founder Mark Zuckerberg, that people might want to attend virtual reality office meetings has been met with widespread skepticism.

But video games are a much different story because playing an immersive game with a few friends is something that would get people to strap on a VR headset. Games are a clear way for companies to monetize the metaverse, as the gaming platforms Roblox and the NFT-based online company Axie Infinity are already developing games for the metaverse. 

Microsoft's announcement of the Activision acquisition has caused a ripple effect across the gaming sphere, as the move could cause a run on big entertainment companies snapping up gaming studios.

Microsoft paid $75 billion for Activision, representing a potential 50% upside from the company's market cap. That type of premium has publicly traded video game stocks like Electronic Arts  (EA) - Get Electronic Arts Inc. Report and Take-Two Interactive  (TTWO) - Get Take-Two Interactive Software, Inc. Report. A 50% premium on Electronic Arts' nearly $40 billion market cap would represent a $60 billion price tag. Take-Two's $20 billion market cap could fetch it $30 billion in a sale. 

Investors are noticing and pouring into those two stocks, and Amazon  (AMZN) - Get Amazon.com, Inc. Report, Apple, Meta Platforms, Netflix  (NFLX) - Get Netflix, Inc. Report, and Walt Disney Co.  (DIS) - Get Walt Disney Company Report are viewed as potential suitors. 

"If large tech is serious about interactive entertainment, the next few months will surely answer those questions. We view Amazon and Sony as the most likely to be acquisitive," said Jefferies analyst Andrew Uerkwitz. 

"Walt Disney Co., Netflix, Amazon, Meta Platforms, and Apple Inc. could look to make a move, and Disney or Apple make the most sense,” Mizuho analyst Jordan Klein Klein wrote to its clients.

And while Take-Two is set to buy Zynga, Klein thinks “it would not stop a big player like Amazon, Apple, Disney in my view” from making a play for Take-Two.

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Here's a breakdown list of more technology and FAANG/MAMAA stocks to watch right now based on their performance over the past week:

Get Your own FB CryptoPunk Avatar; Meta About to Embrace NFTs

NFTs are about to hit Facebook and Instagram. Social media giant Meta Platforms is considering the possibility of letting users create, sell and exhibit NFTs on Facebook and Instagram, the Financial Times reports. An NFT, which is a digital asset usually bought with cryptocurrencies or in dollars, encompasses everything from images, videos to text. The ownership record is tracked on the blockchain, which serves as a public ledger allowing anyone to verify the NFT’s authenticity.

Meta's plans are “at an early stage and could yet change,” the FT reports, adding that teams at Facebook and Instagram are “readying” a feature that will let users display NFTs as their profile pictures, as well as working on a prototype to let users mint new NFTs. Meta is also said to discuss “launching a marketplace for users to buy and sell NFTs.”

TheStreet Quant Ratings rates Meta Platforms (formerly Facebook) as a Buy with a rating score of B+.

Twitter Lets Subscribers add NFTs for Profile Pics

With NFTS showing no signs of slowing down, Twitter  (TWTR) - Get Twitter, Inc. Report is letting paying users show off theirs as profile pictures. The social media platform launched the NFT Profile Pictures on iOS. Available to those who pay $2.99 a month for a Twitter Blue subscription, NFT Profile Pictures will set NFTs apart from regular profile photos through a hexagonal shape.

"Crypto is a key pillar of Twitter's future," Esther Crawford, who has been leading this feature launch for Twitter, told the Wall Street Journal. "We want to support this growing interest among creators to use decentralized apps to manage virtual goods and currencies."

The Street Quant Ratings rates Twitter as a Sell with a rating score of Hold.

Apple Took a Perk Away From its Best Audience (Then Returned it)

Apple had second thoughts about students, teachers and school staff proving their status for education discounts on products two days after requiring verification. The tech giant added a requirement for its education discounts that active students, teachers and school staff seeking to buy a discounted product must first obtain verification of their eligibility through the UNiDAYS discount deals website, MacRumors reported.

To obtain verification, a student or teacher would need to log into their school's learning portal on the UNiDAYS website. However, on Friday Apple pulled back its UNiDAYS verification requirement after the website reportedly was not working for school staff members, preventing them from obtaining discounted products. 

TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.

Snap Stock Price Target Cut by Wedbush Ahead of Q4 Earnings

Snap  (SNAP) - Get Snap, Inc. Class A Report shares slumped Monday after analysts at Wedbush cut their rating and price target on the message app maker ahead of the group's fourth-quarter earnings report next week. Wedbush analyst Ygal Arounian lowered his rating on Snap to "neutral" from "outperform", and cut $20 from his price target to peg the shares at $36 each, citing the impact of Apple's Identifier for Advertisers (IDFA) privacy changes and intensifying competition from China-based TikTok.

Snap cautioned in late October that supply chain disruptions would hit advertising spending in the social media sector over the final three months of the year, adding that new privacy changes in Apple's operating system made it more difficult to track and target users with specific ads, "making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS."

The Street Quant Ratings rates Snap as a Sell with a rating score of Hold.

JPMorgan on Amazon Stock: 43% Upside Potential

The stock market has been falling in January, due mostly to concerns about upcoming Federal Reserve rate hikes. The S&P 500 has lost 7.2% of its value year to date. And the Nasdaq Composite has done even worse, falling 11.6%. At the same time, Amazon  (AMZN) - Get Amazon.com, Inc. Report stock has lost 12%. However, JPMorgan's Doug Anmuth is still bullish on Amazon. In fact, the Seattle-based company is his firm's top pick for 2022. Anmuth rates the stock as a strong buy with a $4,350 price target. That would imply an upside of 43%.

"Investors shouldn't expect a short-term rally for Amazon. Although the company likely performed very well during the challenging holiday season, macroeconomic headwinds — inflation, potential interest rate raises, and increased labor and operational costs — remain a risk for the e-commerce giant," wrote TheStreet contributor Ciro Ribeiro. 

TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B-.

Google Might Soon Accept Crypto for Transactions

Alphabet's Google  (GOOGL) - Get Alphabet Inc. Class A Report might offer crypto in its payment features as part of a broader strategy to team up with a wider range of financial services. That will help show users “the entire array of financial services out there,” Google’s president of commerce, Bill Ready, told Bloomberg. “Our aim is to help create connections,” he said. “We’re not a conflicted party.”

The business, known for the Google Pay system and mobile wallet, has largely avoided the crypto industry. But the company just hired a former PayPal  (PYPL) - Get PayPal Holdings, Inc. Report executive, Arnold Goldberg, to run its payments division after previously retreating from a push into banking. “Crypto is something we pay a lot of attention to,” Ready said. “As user demand and merchant demand evolves, we’ll evolve with it,” Ready said. The Mountain View, Calif., company still isn’t accepting crypto for transactions.

TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.

Microsoft Wants to Be the Disney of Video Games, the Metaverse

When Disney  (DIS) - Get Walt Disney Company Report bought Pixar, nobody -- maybe even not then-CEO Bob Iger -- knew that the Mouse House had a plan to lock up an enormous amount of top-tier intellectual property (IP). He bought Pixar because Disney had been distributing the animation company's films and knew the value of owning the studio. That strategy worked and it later led to Iger feeling confident in buying LucasFilm (Star Wars) and Marvel. 

Microsoft  (MSFT) - Get Microsoft Corporation Report has been, perhaps, more planned in its approach, rolling up 23 game studios that produce everything from "Minecraft," to "Gears of War," Fallout," and much more. Now, Microsoft has a deal to snap up video game company Activision Blizzard  (ATVI) - Get Activision Blizzard, Inc. Report, makers of popular titles “Warcraft,” “Diablo,” “Overwatch,” “Call of Duty” and addictive mobile phone game "Candy Crush. If all goes according to plan, the deal, the biggest acquisition of all time for the Redmond-based company, will find Microsoft purchasing the company in an all-cash transaction valued at $68.7 billion. The transaction is set to close in the next 18-months.

The Street Quant Ratings rates Microsoft as a Buy with a rating score of A+.

Netflix Stock Faces $50 Billion Wipeout on Weak Subscriber Growth Outlook

Netflix  (NFLX) - Get Netflix, Inc. Report shares plunged lower this past week, potentially erasing $50 billion from its market value, following a weaker-than-expected outlook for subscriber growth and the first suggestion that increased competition is affecting its ability to attract new users to its streaming platform.

Netflix said it added 8.28 million subscribers over the period, missing the Street estimate of 8.4 million, and taking the overall total to 221.8 million. Net additions for the first three months of the year would come in at 2.5 million, Netflix said, compared to a market forecast of 5.9 million, citing what it called "Covid overhang" in key overseas markets. Netflix will need to show that it can maintain subscriber growth and boost revenues, particularly outside of the U.S., with fourth-quarter hits such as "Maid" and "Don't Look Up."

TheStreet Quant Ratings rates Netflix as a Buy with a rating score of B.

Intel Invests $20 Billion to Build Two Chipmaking Plants in Ohio

Intel  (INTC) - Get Intel Corporation Report unveiled plans to invest $20 billion into two chipmaking plants in Ohio that it hopes to have up and running within three years as it expands domestic production ahead of a meeting with White House officials. Intel, which detailed a similar investment in Arizona last March, said the Ohio investment will create 3,000 jobs -- with another 7,000 needed to build the two plants -- and expand the group's plans to take on rivals such as Samsung and Taiwan Semi TSMC in the global semiconductor market.

The plans also dovetail with President Joe Biden's ambitions for a $52 billion bill that would help U.S. chipmakers expand domestic production levels and reduce their dependence on overseas markets for crucial components in the nation's industrial and tech supply chain. 

The Street Quant Ratings rates Intel as a Hold with a rating score of C-.

Peloton's Market Cap Drops: Will Apple, Google, Lululemon buy it?

Fitness equipment maker Peloton  (PTON) - Get Peloton Interactive, Inc. Class A Report may want a do-over for its past few months. The company has seen its market cap plunge to under $10 billion as sales have stalled and market demand for its pricey connected-fitness bikes and treadmills seems to have evaporated. The company also faces activist investors at Blackwells Capital LLC to change CEOs and it had an unfortunate run of bad publicity with actor Chris Noth. The "Sex and the City Star" appeared in an ad for Peloton's bike after his character on the "Sex and the City" reboot, "And Just Like That" died riding one.

That made for a clever commercial, which would have been playful, had Noth not been accused by various women of inappropriate behavior on set. That sequence sort of summed up how Peloton's past few months have gone and the company has seen its value plummet. But, Apple, Google, Lululemon  (LULU) - Get Lululemon Athletica Inc Report, Disney, and Nike  (NKE) - Get NIKE, Inc. Class B Report may be buyers as the connected fitness maker's market value plunges.

The Street Quant Ratings rates Peloton as a Sell with a rating score of C.