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It’s been a while. I have been busy. Don’t worry. I’m not going anywhere.

Good morning and Happy Thursday - today’s article is going to be something new and quite frankly talking about things that are the edge of innovation. Today we will be covering:

1. What is the Metaverse?

2. Where are they going?

3. What stocks will (hopefully) benefit from this?

Let’s get into it!

When I think of the Metaverse I think of Ready Player One. A favorite movie of mine that follows the epic journey of a teenager in a distant semi dystopian future. In the movie, the main character known as Parzival (seen above) plays an ultra virtual reality game called the Oasis that everyone seemingly on Earth plays. Long story short, real life is the video game and everything outside of the Oasis is simply eating, sleeping, etc. Everyone in the Oasis has their own persona, clothing, clothing, and life. If you haven’t seen the movie I highly recommend it. 

What Wikipedia thinks the metaverse is:

“The metaverse is a hypothesized iteration of the internet, supporting persistent online 3-D virtual environments through conventional personal computing, as well as virtual and augmented reality headsets.”

Here’s the problem: The definition of the “metaverse” varies vastly depending on the person you ask. One could argue that in many ways we are very active in the metaverse right now.

For example:

1) You facetime your friends through a camera on your iPhone and their presence is purely digital. You are watching a digital representation of yourself and they are doing the same.

2) You play video games with your best friends, share laughs and stories, and build lifelong relationships all through the computer system.

3) Entire online communities live on Instagram, Titktok, Discord, etc.

I could go on for days with examples. The point that I am making is it’s hard to identify to what exact extent of virtual/digital communities, relationships, and personal integration into technology constitutes as being in the metaverse.

Here’s what I mean by this in a simple diagram.

One side of the spectrum:

Any interaction with another human on a digital platform no matter how basic.

The most extreme example of the metaverse:

You are hooked into an omnidirectional running platform, strapped into a fully integrated bodysuit, with a virtual reality headset all the while your name is “Prince of Darkness” and you are hunting snow leopards in the swiss alps with virtual sherpa you paid in Ethereum - all of this in the middle of your living room and so real that your senses couldn’t even know the difference.

I know this extreme example is crazy but it’s coming and it’s coming very fast. The craziest part is this example might not even be the craziest of the examples. Did I say crazy enough times? What the future holds in tech for the coming decades is unimaginable. In the 80s who could predict what the internet is like right now?

To hammer this point home on what I personally think the ultimate metaverse is here is a music video by Duke Dermont that essentially describes what I said above.

Sorry Mom if you’re watching this - this video isn’t very PG. 

I think we can all agree a metaverse comprised of that would be simply awesome.

Is the Metaverse a good thing?

Disclaimer: I am a tech junky and would literally sell my left lung to be in the Oasis (Ready Player One Metaverse) so I am naturally biased but I will try to go over the possible massive cons to striving towards this extreme case of the metaverse. 

This is an existential question of some sort but here are the main cons that come to mind:

1. If you are allowed to literally do anything in a virtual universe that is so real that it feels like real life then anything you do that elicits joy or adrenaline will eventually be dilluted. If you can skydive 20 times a day at some point it will become boring along with every other daredevil event.

2. The harsh reality of life is what makes life - well, life. In this virtual universe if you are never wronged, if your car is never cut off, if you never stub your toe, if you never… you get the point - I think everyone can agree that lessons of human maturity are best taught through adversity. As we have seen rampant social media use has not been too kind to the development of many humans in the past decades with astronomical cases of anxiety, depression, and more directly linked to apps and social media circles. Now with a virtual universe that everyone is taking part in these problems can be even more exponential.

These are just two examples that come to mind of the cons of a metaverse and there are many more - literally several newsletters worth I could come up with. Although I love the idea of it I know it’s a double-edged sword and possibly a slippery slope.

Below is a great interview that Gary Vee has with Zuck on what the future of the metaverse may look like.

Metaverse Stocks

Here is a list of stocks that could thrive in the metaverse and why:

1. Facebook $FB (I own)Believe it or not, Zuck is no stranger to virtual reality. Back in 2014 Facebook bought Oculus and he has been working diligently on that frontier ever since. A lot of people write off Facebook but guess what, they keep printing money and people keep using it (and Instagram). Just because most Americans you know say “I never use Facebook” that doesn’t mean it’s true. The numbers don’t lie:If Zuck can figure out a way to get his user base on Facebook and Instagram into his version of the metaverse it will be a sealed deal. Recent earnings highlights:Facebook ($FB) revenue was down just slightly from $29.07 billion in Q2’21 to $29.01 billion in Q3’21. However, both DAUs and MAUs increased in Q3’21 from 1.91 billion to 1.93 billion and 2.90 billion to 2.91 billion. Net income was down by 11.55% QoQ for Q3’21 and EPS was down from $3.67 to $3.27.

2. Coinbase $COIN (I own)On Twitter, I keep calling Coinbase “the NYSE of crypto” and right now it is. People regard Coinbase for the average person as the easiest place to purchase crypto whether it be on the mobile or desktop site. Recent earnings highlights:For Q3 of 2021, Coinbase ($COIN) brought in $1.31 Billion in revenue vs an estimated $1.56 Billion. Monthly transacting users (MTUs) also took a hit as MTUs in Q2’21 were 8.8 million while MTUs in Q3’21 was 7.4 million. Trading volume was also down from $462 billion in Q2’21 to $327 billion in Q3’21. On the other hand, assets on the platform were up to $255 million in Q3 from $180 million in Q2. Finally, taking a look at Q3 EPS, $COIN had an EPS of $1.62 beating the estimate of $1.57.

3. Unity $UUnity is software that some of the world’s best games used to bring their creations to life. With Unity, you can create 3D, 2D, VR & AR experiences For any industry: games, auto, AEC, film, and more. It’s the equivalent of what FL Studio or Ableton is for the music industry.

4. Roblox $RBLXAnyone born earlier than 2005 is absolutely obsessed with this game. Long story short, it’s like Minecraft but an open-source universe in which game developers can great games within the game. Inside of the game, you can spend “Robux” and the joke that floats around is how much kids spend their parents on these in-game currencies. Like Facebook, this company seems to print money out of thin air.Game developers who used to be the “starving artist” via EA and Activision are thriving on the platform making incredible games for the community and are greatly rewarded for it.

5. Meta ETF $METAMeta is an ETF created by Roundhill Investments that holds 41 stocks with their biggest $NVDA, $RBLX, $MSFT, $U, $FB. Looks like they agree with me!“The Roundhill Ball Metaverse ETF ("META ETF") is designed to offer investors exposure to the Metaverse by providing investment results that closely correspond, before fees and expenses, to the performance of the Ball Metaverse Index ("META Index").” - Roundhill Investments

6. Nvidia $NVDA & $AMD (I own both)This is a picks and shovels play for the metaverse. All of these virtual reality programs run off of computers with the best graphic cards and rendering capabilities. I think we all know $NVDA and $AMD lead these categories especially when it comes to gaming. I hope you found this article interesting, look forward to next week’s article about Web3!As usual…These are all opinions and not recommendations, I know nothing!

I know I put this at the bottom of a lot of my emails… but if you just share this with a friend that is curious that would mean the world to me!

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