I believe in the Metaverse
There has been a lot of talk about the metaverse in investment communities as of late - The latest buzzword deemed the next big thing. And now with Zuckerberg’s announcement of Facebook (FB) rebranding to Meta (META), it seems now it is finally out in the open with the general public. So what exactly is it and does it matter at all?
What is the Metaverse?
The metaverse is thought of as a next-generation iteration of the internet. A way for social media to become more immersive and interactive using technologies like virtual reality and augmented reality. In the metaverse, you will have virtual spaces that will allow you to communicate, collaborate, work and play across distances in a more engaging way than what we are used to today. In place of a simple graphical element on the GUI of your screen, the people you interact with may instead be represented by virtual avatars, capable of carrying expressive facial motions and hand gestures. Much like the most immersive MMORPG video games of today allows for friends to gather up to collaborate on tasks or trades using voice chat and text, the metaverse will let you do just that, while also reflecting your real-life self inside adaptable virtual worlds built entirely optimized for the occasion or task at hand.
'Ready Player One' may be the best example of a metaverse in recent pop culture. The 2018 movie by Steven Spielberg showcases a dystopian near future world where most people have left the real world behind to engage in the virtual world of OASIS where anything is possible.
The best examples of metaverse-like experiences we have today may be in virtual reality social experiences like VRChat or well-established online video games like World of Warcraft or Runescape where communities have spent decades building out their characters while engaging with the virtual world's economies and activities. We also see elements of the metaverse in certain AR experiences like the virtual workspaces offered through Microsoft's HoloLens for enterprise and similar concepts. World-building simulators like Minecraft and Roblox may also offer insight into how virtual spaces can be created. Though I would argue all of these examples fall short of a true realization of the metaverse. However, imaging a combination of all these categories might serve as an easy way to grasp the concept.
Why I think Facebook's rebranding might work
Now, I think we can all agree that Facebook has more than one reason for rebranding. The company has a terrible reputation following privacy scandals like those of the Cambridge Analytica scandal with millions of users’ data being collected, stored, and eventually breached to be leaked without their consent. Most recently former Facebook employee and product manager Frances Haugen turned whistleblower and disclosed vast amounts of internal documents. These documents along with her statements to the court and press serve to prove that the company has prioritized profiting from spreading hate, misinformation, and self-harming destructive behavior among its user base rather than try to prevent it. Last but not least, Facebooks founder and CEO Mark Zuckerberg is known and mocked internet-wide for his unfortunate awkward personality and stature, resulting in the damaging image of him as a 'humanoid android AI machine' or supposed 'alien lizard overlord' pretending to fit in and copy our human traits while he feeds on our personal data.
But on the bright side, there is hope that the rebranding of the company might actually work. In sheer scale, the closest example would be when its Big Tech brother Google reorganized and became a subsidiary of parent company Alphabet (GOOGL) in 2015. Yet the corporation is still known today by the general public as Google, named after their most popular service (i.e. Google Search), and even on the investor’s side of things, not many call them by their true name. This may partly be attributed to the fact that they have kept their ticker names (GOOG and GOOGL) unlike Facebook which with their rebranding are changing theirs from FB to META. But Facebook is looking to rebrand itself to change its public perspective. Their former name will instantly lead you to think of them entirely as Facebook, whereas with the new name hope to keep their virtual reality business from Oculus in mind among others. That is in spite of the company also commanding other massively popular services like Instagram, WhatsApp, and Messenger too. I believe the new name will ease its way into being thought of more generally as a social media provider and virtual communications provider.
The sign outside the company's HQ on 1 Hacker Way in California was replaced on the day of the announcement from the famous Facebook 'thumbs up' to the new logo reminiscent of a set of VR headset lenses or infinity symbol. Meta btw means 'beyond'.
What is more interesting are the actions the company is taking to change along with the rebranding. Along with the announcement they also shared that they are working towards lifting the requirement of logging into a private Facebook account to use the Oculus platform. That requirement has long been widely criticized and has made it more difficult for developers and professionals to use the platform than it should be. The company also recently allowed owners of the Oculus Go headset to unlock the device as it reaches end-of-life. A great move that avoids an abandoned product like this one just turning into more e-waste. The move can likely be attributed to the legendary developer and now consulting CTO at Oculus John Carmack.
Facebook is now a more attractive stock with the metaverse
But is the metaverse just another crazy silicon valley dream? Is it just another path to occupying our mind space with blatant product placement and brand deals like those showcased in 'Ready Player One'? Yeah, maybe... It remains to be seen. But it also makes the Facebook/Meta stock a much more interesting investment opportunity for someone like me. It solidifies the new direction of the company to me and makes me think of them as more than just a play on social media. It introduces new risks to be sure, tens of billions of dollars to be poured into investing in the metaverse for the company over the next several years. The company expects to spend upwards of $50 billion on this endeavor over just the next three years - with no possible way of knowing yet if it will pan out. It is one of the most significant bets I have seen any big tech company take in a long time and truly sets an entirely new focus for its investors. While their bread and butter, Facebook, Messenger, Instagram & WhatsApp all remain the same for now in both name and purpose, they are no longer the core focus of the company.
I suspect many more conservative Facebook/Meta stockholders might not entirely be on board with this move, but Zuckerberg has such huge leverage and control of this company that this does not matter. They may eventually pull out or might already have, but at the same time, the stock just became much more interesting to investors like me. I like to say that I invest in the future. I work hard to try and understand and grasp new concepts in technology and science at the cutting edge. It gives me an advantage in predicting what might end up as the next big thing. For my biggest conviction stocks like Tesla (TSLA), Microsoft (MSFT), Unity (U), and TSMC (TSM) I planned to hold for a decade before entering the stock in the first place. As risk decreases and concepts become more clear, if successful, these types of stocks will rise as they build closer to that future I saw them be a part of. The metaverse is such a concept, one that I believe in and that I think in some way is inevitable - Not in the way pop culture has laid it out to be, nor exactly how Facebook/Meta envisions it now, but I am certain we will see some version of it play a big part in the future of collaboration, entertainment and social.
While we today only are able to enter virtual/augmented reality using heavy and cumbersome headsets like the Oculus Rift, long term I believe Meta can bring it to a form factor such as this, their new collaboration with Ray-Ban offering smart glasses to record stories for social media.
This takes the Facebook/Meta stock to the next level for me. No longer are they just a technology company valued at a rare and fairly low P/E for a tech company of around 20. They are now aspiring to become something more - within a field that I understand and have worked with directly. I worked hands-on for 2 years with virtual and augmented reality in my company and know its potential and capabilities right alongside its limitations and downsides. I may have bought shares of Facebook in the weeks up to this announcement that we all knew was coming, had I not already spent every last dime I have on other ventures like Xiaomi (HK1810) and Tattooed Chef (TTCF) this year. Meta is likely to go into my portfolio at some time in the future and I advocate it a strong buy if you are interested in the space at all. So no, I, unfortunately, do not own any stock of the company just yet.
Critique and misconceptions of the metaverse
Lastly, I would like to touch on the misconceptions and critiques of the metaverse. I have already seen a critique of this move by Facebook saying it will fail. Many can just not see it happen or find the appeal in being someone else or somewhere else virtually. They think it is unattractive and clunky in the day-to-day: And to that, I agree. With today's technology, the metaverse is not ready. Very few would carry a VR headset with them on their daily commute etc. Popular media and even the companies trying to enter the space have created a skewed perception of what it will end up being. I cannot tell you exactly how just yet but ultimately the metaverse will integrate into our daily life in a much more seamless way than we can even demonstrate right now. Just think of all the emerging technologies that could all eventually tie into this concept. There is no telling what it might end up being like.
Superstar Ariana Grande hosted a virtual concert inside Fortnite in August 2021. Epic Games are also working towards building a metaverse.
Cryptocurrencies like Ethereum (ETH) could provide a base for the virtual economies of the metaverse and NFTs could allow for cross-platform trading and transfer of in-world collectibles like skins and cosmetics that are already ludicrously popular and profitable in the gaming space - especially on mobile. Real-time graphics like those provided by Unreal Engine & Unity today are ripe for utilization across a broad sector of industries and entertainment beyond just gaming like we see with Matterport (MTTR) and Snap (SNAP). The same can be said for innovative and engaging new ways of driving e-commerce sales through platforms like Sea (SE) are doing with Shopee and Bytedance with TikTok. The foundations for the metaverse are already being laid.
Disclaimer: I am not a financial advisor, the opinions expressed in this article are entirely my own – always invest at your own risk.
