Stocks To Sell

3 Metaverse Stocks to Sell in June Before They Crash & Burn

During 2023, Coolest Gadgets reported a 31% increase in annual sales of virtual reality (VR) headsets. 2024 is heading in the same direction, with an estimated 14.31 million units sold versus 11.2 million units sold in 2023. This bodes well for long-term metaverse exposure as a VR-enhanced experience across immersive environments and seamless interactions, although some analysts suggest there are specific metaverse stocks to sell.

However, only a few companies, like Meta Platforms (NASDAQ:META), have the deep pockets to splurge on metaverse content, as Meta’s Reality Labs is still bleeding money. Moreover, although AI is adjacent to the metaverse, it keeps diverting investor attention from various metaverse aspects.

Likewise, the complexity of intellectual property within the virtual environment injects regulatory uncertainty similar to the crypto space. Simultaneously, ManpowerGroup’s survey found that the hiring rate is deteriorating faster than during pre-government lockdowns, with hiring intentions falling by 8% year-over-year.

This macro signal elevates the riskiness of metaverse stocks as an emergent market, making it a good idea to revisit your portfolio and see which metaverse stocks to sell at this point.

Autodesk (ADSK)

For many years, Autodesk (NASDAQ:ADSK) has been the industry standard for all things related to digital content creation, be it movies, commercials, engineering, architecture or games. As such, Autodesk is one of the base layers for metaverse content creation owing to its 3D modeling and simulation tools.

Autodesk is of particular interest to shareholders, given the recent focus from the Starboard Value activist fund. The fund took a stake in the company worth around $500 million, following the accounting irregularities about Autodesk’s free cash flow and operating margin but leading to no restatement of prior earnings reports. 

Jeff Smith-run Starboard Value posits that the timing of the probe’s results is suspicious because they came just over a week after the closure of the deadline to nominate the board of directors. As of June 17th, Autodesk responded, noting that “re-opening the advance notice period would not be in the best interests of Autodesk or its shareholders.”

In this 3-month period, ADSK stock saw turbulent activity, netting a negative 5.5% performance but rallying 9% over the last 30 days. These types of situations typically signal restructuring, costly legal proceedings and investor uncertainty. 

As a precautionary measure, investors should consider ADSK as one of the metaverse stocks to sell. At the present price of $240.51, ADSK shares are above the 52-week average of $224.50, creating a robust exit point. Regarding Starboard’s positive influence on ADSK stock, shareholders should still think of market downturns given current macro indicators.

Disney (DIS)

The entertainment conglomerate Disney (NYSE:DIS) has become synonymous with social engineering activism instead of catering to audiences and its bottom line. Owning multiple IPs and franchises, Disney is the primary source for interactive metaverse expansions. 

However, the media company regularly causes friction with its audiences, so much so that Florida stripped Disney of its autonomy and special tax status as a reaction to the company’s ideological activism. 

Although Disney’s umbrella is expansive, the company’s streaming service growth seems to have flatlined, with a revenue increase of just 1.3% in Q2 2024 compared to the year-ago quarter. In other words, despite divided opinions on Disney’s brand of activism, its lack of neutrality ensures its growth plateau. 

This provides an opportunity to sell for investors looking for more promising and business-oriented metaverse exposures. At $101.52, DIS stock is up from its 52-week average of $95.94 and significantly up from its 52-week low point of $78.73 per share. 

Match (MTCH)

As a parent company of popular dating apps like Tinder, Hinge, PlentyOfFish and OkCupid, Match (NASDAQ:MTCH) entered the metaverse landscape in 2021 with the acquisition of Hyperconnect video and social discovery tech firm. Moreover, present CEO Bernard Kim was the president of the mobile gaming company Zynga.

At face value, this represents a natural expansion into virtual dating, leveraging augmented (AR) and virtual reality (VR). That said, dating app users consistently show a lack of satisfaction with such experiences compared to offline ventures. 

One study from last June pointed to a satisfaction score of 2.39 out of a 4-point scale. For comparison, offline dating was 3.05 on a 5-point scale. Although similar, it varies greatly based on age and motivation and great efficacy divergence between the two sexes.

The bottom line is, if online dating, bound by algorithms, curtails people’s multidimensionality and people notice this effect, is Match Group’s business model poised for the growth shareholders want? 

In May’s Q1 earnings, the company reported 2% net earnings growth to $123.2 million from the year-ago quarter. At the same time, the cost of revenue increased by 30%. Likewise, Match Group’s operating income margin decreased from 25% to 21%, indicating a downward trend.

In addition to Match Group showing a cyclical revenue pattern, the stock shows continued valuation loss. MTCH is down 27% year-to-date, settling for $30.54 per share. This is just above its 52-week low of $27.66 per share, making it a solid candidate for cutting investor losses.

On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Shane Neagle is fascinated by the ways in which technology is poised to disrupt investing. He specializes in fundamental analysis and growth investing.

Source link

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up now for breaking stock alerts

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.