Metaverse Stock Slump Could Be Big Opportunity, Say Analysts

Technology stocks are slumping, and investors aren’t entirely off-base for feeling as though the growthier or more thematic a particular tech segment is, the worse it’s performing.

That includes metaverse-related equities. However, some analysts see reasons to believe in stocks with ties to the metaverse and the broader metaverse investment theme. Assuming that ebullience is borne out with more constructive price action, exchange traded funds such as the Fidelity Metaverse ETF (FMET) stand to benefit.

In a recent note to clients, Citi analysts led by Andrew Lin acknowledge that “some industry experts …argue that the metaverse story is more hype than substance, adding little value to users” while also noting “falling stock prices enhance the metaverse optionality value.”

“Citi—which said in March that the metaverse and a future iteration of the internet called Web3 might be worth $13 trillion—has 10 picks across four categories, with a host of other stocks to watch,” reported Jack Denton for Barron’s.

FMET, which follows the in-house Fidelity Metaverse Index, is home to several of the metaverse names Citi is bullish on. That group, not surprisingly, includes Meta Platforms (NASDAQ:META) — the fund’s largest holding.

“They give Meta Platforms (ticker: META), with its metaverse platforms and virtual reality headsets, a High exposure rating, along with immersive gaming platform Roblox (RBLX), 3-D engine group Unity Software (U), and Southeast Asian augmented reality group WIR ASIA (WIRG.Indonesia),” according to Barron’s.

The other names mentioned above aren’t members of the FMET portfolio, but the Fidelity ETF remains tethered to the metaverse theme, and by way of some quality names at that. Consider semiconductor giant Nvidia (NASDAQ:NVDA), which Citi says has “medium” metaverse exposure. That stock is FMET’s sixth-largest holding at a weight of about 4%.

Citi also sees opportunity in some lower-exposure metaverse names, including Apple (NASDAQ:AAPL). Apple is FMET’s third-largest holding at a weight of 4.5%.

“Chinese tech and gaming powerhouses Tencent (0700.H.K.) and NetEase (NTES) pick up Medium metaverse exposure ratings across platforms and software,” reported Barron’s.

Tencent and NetEase are FMET’s fourth- and eighth-largest holdings, respectively, combining for about 8% of the ETF’s weight as of May 31, according to issuer data.

Should Citi’s aforementioned $13 trillion Web3/metaverse forecast prove to be even remotely accurate, patient investors who embrace FMET could be rewarded.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.