How to Invest in Metaverse
Author: Eugene Savitsky
Dear Clients and Partners,
The stock market expects that the Federal Reserve System will soon increase the interest rate, and this cause a lot of tension. The S&P 500 index has already lost 8% since the beginning of the year and remains in a downtrend. The tech sector is also suffering: over the last three months it has lost 9%, becoming one more outsider.
There is no crisis these days: the interest rate is being raised to cool down the economy a bit, i.e. slow down its growth and avoid forming of a bubble. Hence, the current decline of the indices can be looked upon as a correction.
The decline of stock prices and, consequently, the decline of the capitalization of companies can be used by corporations that manager to accumulate plenty of cash on their accounts during the pandemic. They will start engulfing other companies, so that 2022 can become a year of mergers.
Microsoft Corporation buys Activision Blizzard
The one to get started is Microsoft Corporation (NASDAQ: MSFT): on 18 January, it became known that the company was buying Activision Blizzard Inc. (NASDAQ: ATVI). After such news, the shares of the game company grew by 33%.
The purchase will cost 74 billion USD. Microsoft can afford such spending: according to its fresh financial report, it has about 130 billion USD on the balance.
However, what is important here is not the sum that the IT giant will pay but the direction it is going in. As the official press release goes, buying Activision Blizzard will speed up the development of the game business of the corporation and, most importantly, will provide building blocks for the metaverse.
This confirms the idea that the metaverse is developing, not just in the form of empty talks nowadays but as real mergers that aim at getting closer to the virtual reality.
I have already touched upon this topic in the article about the trends of 2022. Today, it is of exception interest to many — just look at the dynamics of the "metaverse" inquiry in Google.
Let us get acquainted with several other companies that can increase their revenue thanks to the growth of the virtual reality industry.
Autodesk
Autodesk Inc. (NASDAQ: ADSK) is the largest software provider for industrial and civil building, car industry and entertainment in the world. With Autodesk software, you can create 3D animation for virtual and augmented reality, which is great for the metaverse.
Hedge funds demonstrate vivid interest in the company. Autodesk shares are held in the portfolios of more than 50 investment companies.
According to the report for Q3, 2021 — we will see the results of Q4 only in March — the revenue of the company reached 1.1 billion USD. This was 14% more than in Q3, 2020. EPS grew from 1.04 to 1.33 USD. However, these results turned out more modest than experts had expected, so Autodesk shares dropped and are trading in a downtrend.
They are further pulled down by the general decline in the stock market. Hence, this investment should become a promising one, where you will be waiting for the negative influence to subside. Currently, the optimum purchase level for Autodesk shares will be the support level at 220 USD.
Adobe
Adobe Inc. (NASDAQ: ADBE) designs software and is well-known for such products as Acrobat, Photoshop, Creative Cloud, and Aero.
Aero is an instrument for designers meant for creating images in the augmented reality and requiring almost no programming skills. Director-general of Adobe Shantanu Narayen considers Aero the best product for metaverse development of these days.
Adobe shares, as well as those of Autodesk, dropped quite a deal after the quarterly report was published. However, the difference is that Adobe revenue lived up to the expectations of experts. Alas, they were unhappy about the forecast for the next year made by the management: EPS is expected to be 12.48-13.7 USD while now it is 10 USD.
With that, the shares lost 20% of the price and keep going in a downtrend. Nonetheless, not all investors support the idea that Adobe shares are to be get rid of. Laura Desmond, a member of the board of directors of the company, used the downtrend to increase the number of the shares in her portfolio. On 7 January she bought 973 shares for about 500 million USD.
Read more at R Blog - RoboForex
Sincerely,
RoboForex team
