The metaverse, widely thought to be the next frontier of internet tech, has become a major topic in the world of investing. A lot of people are getting very impressed by the idea of a seamless, immersive, and persistent 3D virtual-reality world.
Here is why I see Cloudflare and Roblox as unstoppable metaverse stock picks that traders should invest in this year.
The case for Cloudflare
Edge computing — in which applications and data are processed and stored at locations closer to the end-users instead of centralized server farms — enhances data efficiency, security, reliability, and speed. Those characteristics within the network are important for metaverse applications and platforms. Consequently, we could expect that Cloudflare will have a major role in metaverse support.
Cloudflare’s broad network has already extended to 250 cities in over 100 nations. Approximately 95% of the globe’s population can connect to that network in just 50 milliseconds. Its network uses a software-defined networking model — replacing the networking hardware like switches, routers, and load balancers with much cheaper and even more scalable software. Its large network reach combined with its SDN design helps make Cloudflare’s infrastructure ready to supply the metaverse’s dynamic computational and networking needs.
Cloudflare is actually not a metaverse stock. But it will have a big role to play in providing the data and network services that will be required to bring the metaverse to life. This, combined with its formidable position within the enterprise market, makes it a great pick for retail traders.
The case for Roblox
The event helps illustrate how Roblox’s software tools could be used to make 3D experiences that go further than just gaming.
Since its first public offering in March of 2021, the company has made its presence known mainly as an innovative online platform for games. Creators and developers have for some time utilized its technology platform to make games and experiences that mainly cater to children. However, on its Q3 earnings call, Roblox highlighted a big shift in the age of its userbase. More of its customers are over 13 rather than 12 and younger. The company has also reported a 31% jump in daily active users to 47.3 million and a 28% boost in hours they were engaged to 11.2 billion in that quarter.
The rising age of Roblox’s clientele helps its metaverse goals, considering that an older userbase is more likely to be engaged in experiences that involve money — banking, shopping, etc. And if Roblox can keep its users for many years, this will also help its platform benefit from the network effects. A demographic shift towards a more mature customer base will give Roblox a boost financially, as older players will be more likely to control their own money and have more discretion to spend their money on in-game experiences and objects.