When core business isn’t growing, new projects meet with skepticism. In the best of times, “new” usually generates a lot of excitement. In more difficult times, the “new” unfortunately does not have the same effect. In times of fat cows, there isn’t much resistance to including a company’s future growth in valuations. That is, if the company in question is growing a lot, it is not unusual for the markets to assume these projections as facts that add to the value of the stock. In this sense, it could be said that the future is today. Elon Musk, for example, is an expert in this style of valuation. The future is this. The future is that. And people believe him. So your companies are not valued based on revenue, but valued around a combination of promises, hopes, and expectations.
In periods of lean cows, another rooster sings. In this case, with the change in sentiment, investors do ask to see the cheese on the toast. Investors become more conservative. Risk tolerance decreases. And there is a return to the fundamentals. You don’t look so much into the future anymore. Suddenly, the present becomes relevant. That is what is normally called, on the one hand, “value” investing and, on the other, “growth” investing. Let’s say a company like Coca-Cola is a value investment. And a company like Tesla is definitely a growth investment.
In the case of productive assets, income (present and future) plays a leading role in valuations. So a disappointing quarterly report consequently hurts the value of the stock. And the price falls due to a readjustment of valuations. During a bearish decline, the first companies to crash are usually the growth companies. Because, in this supposed “growth”, there is a lot of speculation, FOMO and false expectations. On the other hand, given the economic slowdown, income projections must necessarily be adapted to the new reality.
And the metaverse? The metaverse is a shared digital environment that aims to recreate the three-dimensionality of the real world on the Internet. The idea is to be able to interact in the same way that we do in the real world, but without the physical or economic limitations of the real world. Most know the concept thanks to science fiction. In its simplest version, it is a virtual reality.
Now, in mid-2021, Mark Zuckerberg, CEO of Meta (formerly Facebook), announced that the company was working on its own metaverse. Despite the ridicule and ridicule by many, the initiative did arouse much enthusiasm at the time. Certain. The graphics are not the best. Obviously a lot of work still needs to be done. Let’s just say, well, the best is yet to come. Let’s say Investors now see the metaverse as a “growth” sector. So the metaverse has become the big promise. In fact, in cryptoland, projects related to the metaverse have already started their own speculative career.
Of course, Meta is not the only actor in this adventure. Microsoft has also jumped on this metaverse boat. The company has its own lenses (headset). The HoloLens 2 headset has become a central element in this Microsoft metaverse. As far as software is concerned, we have Microsoft Mesh, for example. It is a mixed reality platform launched in March this year that allows users in different parts of the world to come together in a virtual space. This to name a couple of things. But there are more things in development. Right now, not everything is compatible with each other. However, everything seems to indicate that the participants are building a space based on interoperability.
In fact, as a result of the alliance between Meta and Microsoft, Office 365 applications are now coming to the metaverse. You don’t have to be a genius to know that this Meta-Microsoft team is an effort to create something new that doesn’t depend on the Apple-Google team. We know that Apple (with its App store) and Google (with its Play Store) are the guardians of smartphones. They have the keys. And they control the gates. Then, now, with control of hardware and software, Meta, Microsoft, Epic Games and others can emancipate themselves.
The metaverse, deep down, is not a Zuckerberg whim. It feels like a whim. But it stops being a whim when you understand the role that Apple and Google play on the Internet. With hardware and software, it is no longer necessary to go through these tolls. The metaverse is a solution. Y this solution will catch on with the public as the public finds quality and value in the applications and technology. Of course I doubt very much that the aspiration of Meta and Microsoft is to be the liberators of the people. I guess the real intention is to become the next guardians of the next version of the Internet.
Regarding the metaverse, proponents of decentralization in the crypto space have already voiced their objections to the various Big Tech metaverses. All of these objections are valid. Nevertheless, rhetoric alone is not enough. What you have to do is develop better decentralized solutions than centralized ones. Twitter is full of complaints and criticism. Many say that the future of the Internet is in their hands. But, if what you want is to compete with the Big Tech, dogmas and ideologies are not enough. Development required. And I don’t mean raising millions of dollars with a token. I mean the development of utility applications.
Microsoft CEO Satya Nadella said in a conference call that cyclical trends are affecting Microsoft’s consumer business. Indeed, Microsoft shares closed down 7% on Wednesday, a day after the company released its fiscal first-quarter earnings and delivered a weak quarterly performance. Investors, at the moment, are aware of inflation, credit costs and the possible recession. Therefore, the metaverse passed in the background. Obviously now the metaverse is not a priority.
In this more skeptical environment, the metaverse is now being seen in a different light. Do you remember the enthusiasm that aroused last year? Well, right now, the humor is different. It is not even uncommon for the initiative to be ridiculed. But you have to give time to time. The metaverse will not happen overnight. It makes sense to expect that this next chapter will slowly emerge over time as different products, services, and capabilities integrate and merge. The most important thing is the development of new technologies, protocols and innovations. For now, we can assume that, initially, the Microsoft metaverse will go hand in hand with your company’s products. the metaverse. The future of the Internet?
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