JPMorgan Lists Stocks that will Benefit If Metaverse Kicks Off
Analysts at JPMorgan have claimed that they have a perfect strategy for picking the most profitable Chinese stocks. The company claim that they are very good when it comes to futuristic concepts like the metaverse. The company had defined the metaverse as the next internet iteration that exists as a virtual world where humans can interact through three-dimensional avatars. This new invention has been sweeping the market and internet space for quite some time now; JPMorgan believes they know their way around the niche.
Surprisingly, even with all the hype, this new invention isn’t gaining much momentum in a place like the United States. Many companies had hoped that this wasn’t the situation, including Facebook. This was a big blow on their faces judging from the fact that they’d changed their name from Facebook to Meta just to dominate this new sector. This disappointment also affected their performance in the stock market, which sew their stocks to decline by over 50% this year.
China Challenges
Reports also indicate that China faces the same problem as the United States: consumer adoption problems. But then, China also faces its internal problem with developing metaverse technology. The “regulatory scrutiny” issue tops the list, a fact that the analysts at JPMorgan pointed out in their report on the 7th of September 2022. They also pointed out the ban on cryptocurrency in China, judging from the fact that cryptocurrency is a major criteria for playing metaverse games.
These analysts also stated some of the advantages the arrival of metaverse technology will bring into the industry. The most beneficiaries are the Chinese internet companies; these companies will make more money from the metaverse development than they have ever made in one sector. They termed this process “Metaverse money.”
Top Stocks that are Likely to Benefit from Metaverse Business
These analysts from JPMorgan have picked mostly gaming companies to be the beneficiaries of this emerging market. These companies include NetEase, Tencent, and Bilibili. And among non-internet Asian-based companies are China Mobile, Sony, and Agora. They also believe introducing this technology will ignite a competitive atmosphere among most social media and online/offline gaming companies. And the survival of such companies on the stock market will utterly depend on their competitive edge.
According to Daniel Chen: one of the analysts at JPMorgan, the “development of mobile internet and AI in the past 5-10 years suggests that a company’s competitive advantage in one part of the tech ecosystem is often more important in determining long-term value creation to shareholders than which part of the ecosystem the company operates in.” He went ahead to revealed how companies could generate more revenue from metaverse business.
According to him, JPMorgan is particularly optimistic about the Chinese online game market. They had anticipated the market to triple from over $44 billion to over $131 billion, and the two major companies: Tencent and NetEase, as well as their stocks, will be the most beneficiaries. It is also revealed that both companies (Tencent and NetEase) have one of the strongest gaming business bases in the world.
