The Fed’s now hawkish outlook and surging market volatility caused tech stocks to sell-off earlier this month. However, the impressive financials of several tech companies in the last quarter have rekindled investors’ hope for the sector.

Furthermore, burgeoning metaverse development is fomenting a new frenzy among the tech giants. Increasing numbers of companies are gearing up to set foot in the space, with Apple Inc.’s (AAPL) CEO Tim Cook also recently hinting at the company’s possible entry into the metaverse. As innovations in the AI and ML world keep coming, the meta-world is looking ahead to the long-term. According to a Globe News Wire report, the metaverse’s market size is expected to grow at a 43.8% CAGR through 2028.

Given this backdrop, Wall Street analysts expect fundamentally strong beaten-down metaverse stocks Roblox Corporation (RBLX), Unity Software Inc. (U), and Matterport, Inc. (MTTR) to rally more than 85% in price in the near future. Thus, we think these stocks could be solid additions to one’s watchlist.

Roblox Corporation (RBLX)

RBLX in San Mateo, Calif., develops and operates an online entertainment platform. The company aims to build a safe, civil, and diverse community to inspire and nurture creativity and positive relationships between people worldwide.

On Nov. 8, 2021, David Baszucki, CEO, RBLX, said, “We are happy to report that the developer community earned over $130 million in the quarter and is on pace to earn well over $500 million this year. As we finish 2021 and head into 2022, we will continue to invest in innovative technology to enable our developer community to do what they do best–build and create.”

RBLX’s revenue increased 102.2% year-over-year to $509.34 million for the third quarter, ended Sept. 30, 2021. Its cash and cash equivalents came in at $1.93 billion for the period ended Sept. 30, 2021, compared to $893.94 million for the period ended Dec. 31, 2020. Also, its total assets were $3.27 billion, compared to $1.85 billion, for the same period in the prior year.

Analysts expect RBLX’s revenue to grow 21.2% year-over-year to $3.31 billion for its fiscal 2022. Its EPS is also estimated to increase 19.5% for fiscal 2022. The stock has declined 43.6% in price year-to-date to close Friday’s trading session at $58.18. Wall Street analysts expect the stock to hit $116.13 in the near term, which indicates a potential 99.6% upside.

Unity Software Inc. (U)

U operates a real-time 3D development platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. U is headquartered in San Francisco.

On Dec. 1, 2021, U announced that it had completed the acquisition of Weta Digital’s tools, pipeline, technology, and engineering talent. Marc Whitten, Senior Vice President and General Manager Create Solutions at Unity, said, “We are thrilled to officially welcome Weta Digital’s highly talented engineering team to Unity and to begin the journey of integrating two powerhouse technologies.”

U’s revenue increased 42.6% year-over-year to $286.33 million in its fiscal third quarter, ended Sept. 30, 2021. Its net loss came in at $115.15 million, compared to $144.72 million in the previous period. Also, its loss per share was $0.41, compared to $0.97 in the year-ago period.

Analysts expect U’s revenue to increase 30.2% year-over-year to $1.42 billion in fiscal 2022. The company’s EPS is estimated to increase 69.4% per annum for the next five years. It surpassed the EPS estimates in each of the trailing four quarters. The stock has lost 33.6% year-to-date to close Friday’s trading session at $94.92. However, Wall Street analysts expect the stock to hit $180.30 in the near term, which indicates a potential 90% upside.

Click here to check out our Software Industry Report for 2022

Matterport, Inc. (MTTR)

MTTR, a Sunnyvale, Calif.-based spatial data company, focuses on digitizing and indexing the real world. It offers Matterport digital twins, a 3D data platform to design, build, operate, promote, and understand spaces.

On Jan. 6, 2022, MTTR completed its acquisition of Enview, Inc. RJ Pittman, MTTR’s Chairman and CEO, said, “Enview’s powerful spatial data analysis technology fits right into this strategy and readily complements the Matterport platform. Together, we can deliver breakthrough building analysis and data insights to our customers, including automated building inspections, AI-powered space planning, and property utilization analysis to deliver operating efficiencies in a completely digital environment.”

MTTR’s total revenue increased 10.3% year-over-year to $27.66 million for its fiscal third quarter, ended Sept. 30, 2021. Its cash and cash equivalents were  $148.85 million for the period ended Sept. 30, 2021, compared to $42.28 million for the period ended June 30, 2021. Furthermore, its total assets came in at $653.44 million compared to $71.53 million for the same period.

For fiscal 2022, analysts expect MTTR’s revenue to be $160.06 million, representing a 46.6% year-over-year rise. The stock has declined 58.8% in price year-to-date to close Friday’s trading session at $8.51. Wall Street analysts expect the stock to hit $31.33 in the near term, which indicates a potential 268.2% upside. 

RBLX shares were trading at $64.28 per share on Monday afternoon, up $6.10 (+10.48%). Year-to-date, RBLX has declined -37.69%, versus a -6.07% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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