Avoid these 3 overrated metaverse stocks in December


The term ‘metaverse’ has recently gained in popularity after social media giant Facebook changed its name to Meta Platforms Inc. (FB) and Microsoft Corp. (MSFT) claimed this new innovative hyper-real alternative world, based on augmented reality.

Investors have increased cryptocurrency transactions to buy “real estate” in the metaverse. However, this the purchase of land remains speculative, and it is not known if this boom is in fact a bubble. The Metaverse is still under construction, and the issue of invasion of privacy has been raised, with low confidence in FB, the precursor of the metaverse.

Therefore, it might be better to avoid the overpriced metaverse shares of Roblox Corporation (RBLX), Unity Software Inc. (U) and Matterport, Inc. (MTTR) in December.

Roblox Corporation (RBLX)

RBLX is an online entertainment platform developer and operator that offers Roblox Client, an app for users to explore the 3D digital world, and Roblox Studio, a set of tools that allows developers to create and publish content. . The company went public by listing of its Class A common shares on the New York Stock Exchange March 10, 2021.

On October 27, RBLX announced the total capital price of $ 1.0 billion of its 3.875% senior bonds due 2030. The company plans to use the proceeds for general corporate purposes.

In terms of futures price / book, RBLX is currently trading at 130.00x, 4.896% above the industry average of 2.60x. It’s forward Price / Cash Flow the multiple of 170.41 is 1,621.8% higher than the industry average of 9.90.

For the fiscal third quarter ended September 30, RBLX’s total costs and expenses increased 93.4% year-on-year to $ 586.78 million. Operating loss and net loss attributable to common shareholders increased 50.3% and 52.2% compared to the same period last year to reach $ 77.45 million and $ 74 million, respectively.

The consensus estimate of EPS of negative $ 0.14 for the current quarter (ending December 2021) indicates a 27.3% year-over-year decline. Additionally, RBLX has missed consensus EPS estimates in three of the past four quarters.

The stock was down 8.7% in the past five days and 10% during the day to close yesterday’s trading session at $ 113.41.

RBLX POWR odds reflect this gloomy outlook. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.

RBLX has a stability rating of F and a value and sentiment rating of D. In stock 23 Entertainment – Toys and Video Games industry, RBLX is ranked No. 19. Click here to view additional POWR ratings for RBLX (Growth, Momentum and Quality).

Unity Software Inc. (U)

U is a real-time 3D development platform that provides its customers with software solutions to create and monetize real-time 2D and 3D content, designed for phones, tablets, PCs, consoles and virtual reality devices.

On December 1, the company announced that it had completed the acquisition of the visual effects company, tools, pipelines and engineering expertise from Weta Digital, with the goal of empowering game developers. Artists and creators. On the other hand, the transaction resulted in an outflow of cash and shares of $ 1.63 billion.

U’s forward price / sell multiple of 45.20 is trading 1,025.9% higher than the industry average of 4.01. In terms of EV / forward sales, it is currently trading at 43.59x, 945.2% above the industry average of $ 4.17.

U’s non-GAAP operating loss increased 43.1% year-over-year to $ 12.08 million in the fiscal third quarter ended September 30. Non-GAAP net loss increased 14.3% from the prior year quarter to $ 14.81 million. The company’s cash and cash equivalents balance for the period was $ 766.25 million, down 57% from the same period last year.

Analysts expect U’s EPS to remain negative at least until next year (fiscal 2022). U shares are down 1.2% year-to-date to close yesterday’s trading session at $ 151.68. Over the past five days, it has fallen 16.6%.

It’s no surprise that U has an overall D rating, which translates to Selling in our POWR rating system. The stock also has a D rating for value and stability. U is ranked # 18 in the Entertainment Industry – Toys and Video Games.

To see the additional POWR ratings for Growth, Momentum, Feeling, and Quality for U, Click here.

Matterport, Inc. (MTTR)

MTTR operates as a spatial data company focused on digitizing and indexing the built world. The company’s offerings include the Matterport digital twins, Matterport Capture, the Matterport Workshop app, the Matterport Showcase app, and Matterport VR. It came public after a business combination with Special Purpose Acquisition Company (SPAC) Gores Holdings VI on July 23, 2021.

On December 1, MTTR announced the availability of its platform on Amazon.com, Inc. (AMZN), Amazon Web Services (AWS) Marketplace, allowing AWS customers to access MTTR’s digital twin technology. However, it may be some time before any substantial gains can materialize from this collaboration.

In terms of futures price / sales, MTTR is currently trading at 74.94x, 1,766.8% above the industry average of 4.01x. Its EV / futures multiple of 73.53 is 1,662.9% above the industry average of 4.17.

For the fiscal third quarter ended September 30, MTTR’s total operating expenses increased 324.1% year-on-year to $ 58.54 million. Non-GAAP net income and non-GAAP net income per share attributable to common shareholders reached $ 14.03 million and $ 0.06, respectively, representing a decrease of 1,013.5% and 700% from the previous year. quarter of the previous year.

Street expects EPS to remain negative until next year (fiscal 2022). The stock fell 4.5% during the day to close yesterday’s trading session at $ 31.18.

MTTR’s poor outlook is reflected in its POWR ratings. The stock has an overall D rating, which is equivalent to Sell in our proprietary rating system. The stock has a stability rating of D. In stock 169 Software application industry, MTTR is ranked # 118. The industry is classified F.

In addition to the POWR ratings we have shown above, we can see the MTTR ratings for growth, value, momentum, sentiment and quality. here.

RBLX shares were trading at $ 118.02 a share on Thursday afternoon, up $ 4.61 (+ 4.06%). Year-to-date, RBLX has gained 69.81%, compared to a 23.93% gain in the benchmark S&P 500 over the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. Following…

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