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META Set to Create Economic Opportunities in the Metaverse

Meta Platforms META is launching a new policy in the Metaverse Standards Forum created with other metaverse enthusiasts like Acer, Adobe and Blockchain Arbitration Society to develop metaverse as an independent commercial platform.

Per META, the metaverse will be worth $3 trillion by 2031. Big cities like Dubai, Seoul and Taiwan are planning to take advantage of the recent boom in metaverse popularity. Metaverse is also offering new opportunities for creators to develop new forms of art and entertainment, build more interactive relationships with their audiences and create new economic opportunities for themselves. Also, with the advent of hybrid work and online education, the metaverse provides a huge opportunity for industries to operate and provide customers with new experiences.

The advent of Web3 technologies like artificial intelligence (AI), Blockchain and machine learning (ML) is at the core of creating the $3 trillion virtual reality.

Meta is heavily investing in AI technology which will help build the metaverse as a commercial virtual reality independent of the real world. However, the company is facing certain major setbacks, hurting its future growth extensively.

In September, Meta closed its cryptocurrency pilot project - Novi. Despite having custody support of Coinbase, which is the largest U.S. cryptocurrency exchange trading some 50 different digital assets, the current market scenario and volatility have forced Meta to shut its operations for Novi. Traders and investors are extremely bearish about the asset class since both the crypto and NFT market crashed a year ago. The price of almost every major cryptocurrency, like Bitcoin and Ethereum, is now worth half or even less than their all-time highs.

Previously, Meta's Diem cryptocurrency was shelved even before it commenced operations as several high-profile partners bailed out due to increasing scrutiny from lawmakers and financial regulators on the company.

However, the company is hell-bent on building new economic opportunities in the metaverse with its recent policy approaches. The policies will help recognize the need for decentralized systems and build collaboration between the public and private sectors.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Meta Banking on Metaverse to Boost Prospects

Meta is facing its worst downfall in many years, negatively impacted by its advertising business segment's declining revenues.

META’s top-line growth in the third quarter was also significantly affected by negative forex impact.

Rising inflation hurt the ad spending budgets of enterprises, which weighed on the ad revenues of the company in the last reported quarter.

Meta’s ad revenue business is facing a decline due to ad targeting-related headwinds created by Apple’s AAPL iOS changes.

Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Meta’s advertisement revenues decreased 3.7% year over year to $27.24 billion in the third quarter, and it expects these factors to hurt advertising growth in the fourth quarter of 2022.

These reasons have impacted the stock negatively as it plummeted 63.3% in the year-to-date period compared with the Zacks Computer and Technology sector’s fall of 30.4%.

However, META, which currently carries Zacks Rank #3 (Hold), is banking its revenue growth in the coming quarters on solid return on investments from its investment in AI and ML and partnerships with other PyTorch foundation co-founders Microsoft MSFT and NVIDIA NVDA. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meta recently launched its first high-end virtual reality headset, Meta Quest Pro, at the Meta Connect event. Microsoft Chairman and CEO Satya Nadella joined Zuckerberg at the event to announce the new partnership, bringing new work and productivity tools like Microsoft 365 and Teams to Meta Quest Pro and Meta Quest 2 next year.

Meta has collaborated with NVIDIA to build an AI research supercomputer, helping META AI researchers to build different AI models crucial for creating the metaverse.

As Meta bets on building the metaverse for the future, investment in AI is expected to bring lofty ROI for the company and separate its services from competitors. This will help the company regain lost market share in the long term.

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