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The metaverse is still a work in progress. After Facebook decided to change its company name to Meta Platforms (NASDAQ:META) back in 2021, many investors thought the metaverse would be the next big thing for entertainment and online interactions. While there is definitely some evidence of that, much of the equities gains in metaverse-related stocks have been concentrated with the large tech companies. The Roundhill Ball Metaverse ETF (NYSEARCA:METV), for example, has risen 8.6% year-to-date (YTD), but the gains have come from names like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Nvidia (NASDAQ:NVDA) and Meta.
Below are three metaverse stocks to sell now before it’s too late.
Unity Software (U)
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Unity Software (NYSE:U) provides the software and platform for creators to build 2D and 3D content for mobile phones, tablets and personal computers. In particular, Unity offers Create Solutions, a set of tools and services used to build, ship and run real-time 2D and 3D content as well as its Grow Solutions product, which provides creators with a way to grow and engage their user base while monetizing their content. Unity Software has been under scrutiny from both users and investors. The software firm announced a restructuring plan in January that would see the company cutting 25% of its workforce. While this pleased investors, Unity Software still issued weak guidance for Q1’2024 just a month later.
Weak guidance coupled with an ongoing restructuring plan has made investors skittish on U shares. The stock has collapsed 51% since the start of the year.
Match Group (MTCH)
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Match Group (NASDAQ:MTCH) may be an unfamiliar name to readers, but the holding company’s dating products are probably not. Tinder, Hinge and Match compose Match Group’s extensive list of wholly-owned dating apps. While not a staple name in the metaverse sector, the company has been looking into integrating virtual experiences and augmented reality (AR) into its platforms. For instance, Tinder has experimented with features that incorporate AR and virtual environments, such as Swipe Night. an interactive video series where users make choices that affect the storyline and who they match with.
Unfortunately, the ongoing macroeconomic uncertainty has negatively affected Match Group’s financial performance. Despite beating Wall Street estimates in their Q1’2024 earnings report, Match Group reported a 9% decline in its paying user base, bringing the total figure below 10 million.
Continued weak consumer discretionary spending will hamper Match Group’s near and medium-term growth prospects. Shares have dipped almost 20% YTD.
Roblox (RBLX)
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When discussing online or virtual entertainment, it is hard to not discuss gaming giant Roblox (NYSE:RBLX). The platform’s Roblox Studio product empowers ordinary users to build and publish their own 3D content and experiences. Roblox Client is where users can game and explore various kinds of 3D gaming content.
Although Roblox is clearly a growing platform with millions of users, the platform has struggled with profitability in recent years. Roblox’s Q1’2024 earnings print figures saw the company missed Wall Street’s estimates for revenue and booking. Also, the company’s net loss did not improve on a year-over-year basis. Weak bookings guidance for Q2 highlighted the growth headwinds facing the platform.
RBLX shares are down nearly 27% on a YTD basis.
On the date of publication, Tyrik Torres 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 InvestorPlace.com Publishing Guidelines.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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