2 Metaverse Stocks That Could Make You Richer in 2023 – The Motley Fool

It wasn't all that long ago that investors were excited about the potential for the metaverse. Some analysts were tossing around projections that the market for the virtual world could eventually be in the trillions of dollars. The stocks of companies with major metaverse initiatives were on fire.

That was then. Today, there isn't nearly as much talk about the metaverse. Most of those once-sizzling stocks have flamed out.

But don't think for a second that the metaverse opportunity isn't significant. There's still a lot of money to be made -- by companies and investors.Here are two metaverse stocks that could make you richer in 2023.

You might not think ofAmazon (AMZN 1.74%) as a metaverse stock. After all, the company's head of devices Dave Limp said earlier this year that Amazon is focused on "the real world" and not the metaverse.

However, there's more to the story. In February, Amazon posted a job opening for a product manager on its Amazon Web Services (AWS) team who "will own the delivery of cloud-based metaverse services." This job posting shows that the company actually is more focused on the metaverse than you might think.

This shouldn't be surprising. AWS reigns as the leading provider of cloud hosting services. The metaverse will present a massive growth opportunity for the cloud hosting market.

Amazon would be crazy to ignore the metaverse. And it isn't crazy.

I predict that Amazon will ultimately be among the big winners if and when the vision of the metaverse becomes a reality. Before that happens, though, the stock could (and will, in my view) make investors money in 2023 for a completely different reason.

Amazon stock is historically cheap after plunging close to 50% this year. Much of this decline is related to macroeconomic factors, rather than anything specific to the company. I'm not in the camp that believes a new bull market is imminent. But I do think it's quite possible that we could see a big stock market rebound in the second half of next year.

Meta Platforms (META 0.79%) provided the main catalyst for investors' initial enthusiasm about the metaverse opportunity. The company even changed its name from Facebook to reflect its big focus on it.

That metaverse pivot appears to have backfired badly. Meta stock has plunged close to 65% this year. CEO Mark Zuckerberg has been raked over the coals by some investors for spending too much money on what they view as a quixotic dream.

It's true that Meta's Reality Labs, the home to its metaverse initiatives, is burning through cash. However, Zuckerberg made a pretty good case for this spending in an interview earlier this month.

He noted that 90% of Reality Labs' research and development investments are going toward virtual-reality headsets and augmented-reality glasses. Those efforts could pay off handsomely, even if Zuckerberg's metaverse vision isn't achieved.

The metaverse won't be a moneymaker for Meta anytime soon. But the company's social networking apps continue to generate enormous revenue. In the third quarter alone, Meta raked in $27.7 billion in sales with profits of nearly $4.4 billion. Although both numbers reflected year-over-year declines, that's still a lot of money.

Like Amazon, Meta is feeling the impact of macroeconomic headwinds. Advertising spending has fallen. However, if a recession is avoided (as Goldman Sachsexpects), the ad market could regain momentum next year. Even if a recession comes, many economists predict that it will be short and mild.

Importantly, Meta's user base continues to grow. In Q3, the numbers of daily and monthly active users across its family of social apps both increased by 4% year over year to 2.93 billion and 3.71 billion, respectively.

The company is also rolling out new products that should retain existing users and attract new ones. It's retooled its feeds to focus more on content curated by artificial intelligence (AI). And Meta is working hard to increase monetization, as well, especially with its WhatsApp messaging app.

Meanwhile, Meta stock is attractively valued. Shares trade at only 14.5 times expected earnings. Aswath Damodaran, the NYU finance professor who literally wrote the book on valuing companies (actually, he's written several of them), believes that the stock has practically all upside potential based on its current valuation.

With all of this in mind, Meta looks like a stock that could very well make investors richer in 2023. If its monetization and metaverse efforts pay off, that increased wealth could be multiplied over the long term.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Speights has positions in Amazon.com and Meta Platforms. The Motley Fool has positions in and recommends Amazon.com, Goldman Sachs Group, and Meta Platforms. The Motley Fool has a disclosure policy.

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2 Metaverse Stocks That Could Make You Richer in 2023 - The Motley Fool