The Metaverse is a few years away from us, but interest in the pervasive digital world is running high. Back in January, we covered a number of major companies that are going to benefit from the Metaverse concept and its expansion. More recently, we focused on NVIDIA, one of our key picks among the Metaverse-related stocks. However, companies that are going to benefit from the arrival of the Metaverse aren’t limited to Big Tech names like Google, Microsoft, Meta, or NVIDIA. Some relatively smaller niche players are shaping up as great Metaverse investment prospects. We are going to cover three of these in this article.
Take-Two Interactive Software (TTWO)
Gaming is going to be a massive part of the Metaverse. Take-Two Interactive is a major player in the gaming and esports niches. The developer of some of the legendary games, such as Grand Theft Auto and NBA 2K, Take-Two is often viewed as a solid Metaverse investment.
Take-Two isn’t an outright leader by market cap within its major niches. It’s the 4th largest esports company and only the 10th largest among video game developers. Yet, Take-Two has recently outperformed its larger, and often more hyped-up, niche rivals when it comes to delivering returns.
In the areas of video gaming and esports, many companies are riding the wave of these concepts’ popularity. Yet, a lot of the leading gaming and esports stocks are posting negative returns, a sign of less than full confidence in their future prospects. Take-Two is different in that regard – the company’s stock has grown by a very healthy 10.5% over the year.
In comparison, Take-Two’s two big rivals in the esports category, Electronic Arts and Activision Blizzard, have posted yearly returns of – (negative) 8.5% and 0%, respectively. While these competitors of Take-Two are hoping to scoop up the benefits of the association with the Metaverse in the future, Take-Two is already busy doing it right now.
While TTWO is still not overvalued, pay close attention to this outstanding niche performer. The arrival of the Metaverse will only lift TTWO to new heights.
Fastly (FSLY)
Fastly, a provider of cloud computing and a content delivery network, is one of the best performing stocks in the IT Security niche. While not having a brand visibility of Cloudflare or Palo Alto Networks, Fastly has done exceedingly well in recent times, with a yearly return of 17%.
With recent management changes and accelerating growth, Fastly is often cited as a potential hidden gem among cloud computing companies. The Metaverse will require an ample amount of services that Fastly is well-positioned to provide – from secure storage to fast content delivery capacity. Our view is that Fastly will be among those smaller players that will grow much more prominent in the cloud computing space. If you are after a growth stock linked to the Metaverse, FSLY could be a great pick.
Shopify (SHOP)
The 5th largest e-commerce company in the world, Shopify isn’t precisely a name unknown to the investor crowd. Within its niche, Shopify is still a minor, whose $75 billion market cap is dwarfed by Amazon’s $1.2 trillion and Ali Baba’s $211 billion. Although its key niche rivals are much larger, Shopify has resoundingly beaten them in terms of ROI in recent times, with a whopping 61% yearly growth.
Shopify is all about e-commerce, and the Metaverse will feature electronic buying and selling of goods, services, and content on a monumental level. There is hardly a stock that could benefit more from this massive e-trade than SHOP. Given the company’s recent strong growth, some analysts might believe that SHOP is overvalued. In our view, the company’s strong positioning in the e-commerce niche will only solidify with the arrival of the Metaverse. For a long-term oriented Metaverse investor, SHOP might be among the best picks.
The three stocks above, while not having the market footprint that Big Tech names enjoy, are going to be among the biggest beneficiaries of the Metaverse development and implementation. All three have performed well over the last year. This is more a testament to their strong fundamentals rather than an indication of their overvalued status. These stocks’ recent strong performance, solid fundamentals, and “Metaverse-friendly” specialisations, give us enough reasons to nominate them as great niche Metaverse stocks.