Today’s article presents three virtual reality stocks worth considering for investment. VR technology, once confined to the realm of science fiction, is now becoming a tangible reality with significant advancements in hardware like Apple’s Vision Pro and Meta Platform’s Meta Quest 3. These innovations have substantially enhanced user experiences and accessibility, ushering in a new era of immersive entertainment and transforming various sectors such as healthcare, education, and defense.
The global VR market, valued at approximately $59.96 billion in 2022, is forecasted to experience a robust compound annual growth rate (CAGR) of 27.5% from 2023 to 2030. Against this backdrop, here are three virtual reality stocks with unique growth drivers that investors may want to consider.
Matterport (MTTR)
One of the top picks in the virtual reality stocks category is Matterport (NASDAQ:MTTR), a trailblazer in the spatial data domain renowned for its creation of immersive 3D models of physical spaces. Beyond revolutionizing real estate through digital twin technology, Matterport’s 3D capture solutions are widely adopted in architecture, engineering, and facilities management for spatial data acquisition and management.
In its recent fourth-quarter and full-year financial results, Matterport reported a significant 56% year-over-year decrease in its quarterly net loss to $11.8 million. Despite falling short of revenue expectations, the company exhibited financial resilience and growth, underscored by its debt-free status, substantial expansion in subscription services, and annual recurring revenues (ARRs).
Moreover, Matterport’s strategic collaborations with industry leaders and the introduction of AI-driven solutions like Matterport Capture Services and the AI-powered Property Measurement Tool further solidify its competitive edge and market presence.
While MTTR stock has experienced a 27% year-to-date decline, analysts’ average price target of $3 implies a potential 42% upside from current levels. Notably, the stock trades at 3.6 times trailing sales and a price-to-book (P/B) ratio of 1.2.
Microsoft (MSFT)
Another noteworthy contender in the virtual reality investment landscape is Microsoft (NASDAQ:MSFT), leveraging initiatives like Microsoft Mesh to facilitate shared collaborative experiences and holographic interactions in mixed reality (MR). Additionally, Microsoft’s HoloLens 2 MR headset offers users immersive experiences featuring spatial audio and advanced interaction functionalities.
In its recent financial report, Microsoft disclosed revenues of \(62.0 billion, marking a 16% year-over-year increase, with diluted earnings per share (EPS) of \)2.93, up 23% from the previous year. The company also returned $8.4 billion to shareholders through share repurchases and dividends.
With Microsoft stock up 8% year-to-date and trading at historic highs, the current valuation metrics indicate a price of almost 37 times trailing earnings and 13.5 times sales. Despite appearing relatively pricey, analysts set a price target of $465, suggesting a potential upside of over 15%.
Sony (SONY)
Sony (NYSE:SONY) emerges as a key player in the virtual reality investment arena, driving innovation through hardware and software developments. Sony’s PlayStation VR platform offers users high-fidelity displays, advanced haptic feedback, and intuitive controllers for immersive gaming experiences. Furthermore, Sony is exploring applications beyond gaming, such as a system enabling 3D model editing in VR environments.
In its recent earnings announcement, Sony reported a 22% year-over-year revenue increase, with a notable 13% growth in sales for the “Game & Network Services Segment.”
Despite these promising advancements in immersive technologies, SONY stock has faced a 9.38% year-to-date decline. Trading at around 19 times trailing earnings and 1.2 times sales, the stock presents an intriguing opportunity with a 26.05% potential upside from the current price, as per the 12-month median stock target of $108.17.
Please note that the opinions expressed in this article are those of the author, Tezcan Gecgil, PhD, who has no direct or indirect positions in the securities mentioned. Dr. Gecgil brings over two decades of experience in the U.S. and U.K. financial markets and is a Chartered Market Technician (CMT) charterholder.