By Jack Denton
Translation: Laura Markus
Tech stock prices are falling. Some of the most popular and well-known growth companies, including Meta, Netflix, Coinbase and others, have suffered the most. But a team of Citigroup analysts led by Andre Lin still sees an opportunity.
“Metaverse is the most popular of all tech trending words,” the team wrote in a report this week. The shares, which have lost up to 50% of their market value this year, were not rated “Sell”.
Instead, “falling stock prices increase the value of the Metaverse’s option,” according to the report.
Ending the bear market: Wall Street is betting on Metaverse stocks.
In March, Citigroup said the Metaverse and a new version of the Internet called Web3 could be worth $13 trillion. Citigroup picked ten companies in four categories, along with a few other stocks to watch.
Citigroup remains bullish on the Metaverse. The concept that the Internet of the future will consist of interactive spaces and virtual worlds, although still in its infancy, has “potentially far-reaching implications for key players”.
However, Lin’s team also admitted that “some industry experts believe the Metaverse is hype with little substance and offers little value to users.”
The analyst group believes that five fundamental and investable technologies underpin the metaverse: operating systems; Blockchain protocols (using cryptocurrencies and NFTs as a “lubricant” of the digital economy); simple user interfaces such as voice control; immersive reality headsets; and IT infrastructure.
While the Citigroup team points to 47 stocks in categories such as hardware, chips and telecommunications, it sees platforms and software as the biggest opportunities for use in the metaverse.
According to their rating, Meta has high engagement with its Metaverse platforms and virtual reality headsets. The same goes for immersive gaming platform Roblox, 3D engine group Unity Software, and Southeast Asian augmented reality group WIR ASIA.
Tech giant Microsoft and Chinese tech and gaming giants Tencent and NetEase are ranked as medium exposure to the metaverse for platforms and software, as is Sony for tech hardware.
In terms of chips, Nvidia’s commitment to the Metaverse with its “Omniverse” industrial applications is rated average. The same goes for Taiwanese graphics card maker Micro-Star in the server category.
There are also a number of investment ideas with low exposure to the Metaverse that Citigroup believes fit the Metaverse. These include Apple, with its virtual reality headsets and vast digital network; Intel, Qualcomm and Advanced Micro Devices (AMD) in processors; Verizon, T-Mobile US and AT&T with their cellular networks and Ericsson and Nokia with their network devices.
Conflict of Interest Notice:
The CEO and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has taken direct and indirect positions in the following financial instruments mentioned in the publication or related derivatives that are likely to benefit from any price changes resulting from the publication : Apple, AT&T, Nvidia.