One Year On, Metaverse Frenzy Yet to Yield Dividends
In the year since Mark Zuckerberg unveiled Facebook Inc.'s multibillion-dollar shift to developing an immersive virtual world, the investment industry has rolled out a flood of products to capitalize on the metaverse frenzy. For investors, the timing couldn't have been worse.
The four dozen exchange-traded funds and mutual funds in the Bloomberg database that have the word “metaverse” in their description -- many of them introduced in the past 12 months -- have plunged in the bear market. The Roundhill Ball Metaverse ETF, the biggest of them, has fallen 51% in the past year.
The declines accelerated Thursday after shares of Zuckerberg's rechristened Meta Platforms Inc. plunged the most in eight months. The chief executive officer and co-founder asked investors to be patient with the huge investments in the metaverse even as the company reported a slowdown in its main source of income, digital advertising.
“It's one thing to rebrand it, it's another thing to say, well, we don't see substantial profits from the metaverse” for years, said Dennis Dick, head of market structure and a proprietary trader at Bright Trading. “Investors in this market aren't going to wait eight years to see substantial profits.”
The performance of the metaverse funds shows the risk of piling in to an unproven industry regardless of the price you pay: The companies that are seen as the building blocks of the metaverse -- digital worlds where users can socialize, play and do business -- are just the kind of stocks that investors are fleeing right now. Many of them have little or no earnings and sell for high valuations, with the promise of rapid growth and big profits far in the future.
The 18 metaverse funds that have been around for a year or more are
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