The rapidly growing metaverse market is tipped to be the next big technological phenomenon aimed at creating multidimensional online spaces through augmented and virtual realities. Given its potential to drive the next big opportunity in the tech space, several tech giants are heavily investing in this area to fuel their transition.
Although the metaverse is still in its embryonic stage, immersive metaverse technologies such as augmented reality (AR), virtual reality (VR), and mixed reality (MR) have gained attention over the past few years. According to experts at Analysis Group, the metaverse could contribute 2.8% to GDP in the 10th year after its adoption.
In addition, the global metaverse market is expected to reach $824.53 billion by 2030, growing at a 47.2% CAGR. An increased focus on converging the digital and physical worlds using the Internet, and the growing momentum and popularity of Mixed Reality (MR), Augmented Reality (AR), and Virtual Reality (VR) are expected to drive the market growth significantly.
With various companies, ranging from chipmakers to gaming, joining the bandwagon, it is clear that the metaverse will dictate the next generation of the Internet sooner or later. Thus, we think of investing in popular metaverse stocks Autodesk, Inc. (ADSK), Microsoft Corporation (MSFT), and Rimini Street, Inc. (RMNI) could be rewarding.
Autodesk, Inc. (ADSK)
ADSK provides 3D design, engineering, and entertainment software and services. It offers AutoCAD Civil 3D, Autodesk Build, BIM 360, AutoCAD, AutoCAD LT, computer-aided manufacturing (CAM) Solutions, Fusion 360, Inventor tools, Vault, Maya, and 3ds Max, among others. The company’s offerings serve customers in architecture, engineering, construction, product design and manufacturing, and digital media and entertainment industries.
On April 12, 2022, Evans General Contractors, an international design-build contracting firm, announced the adoption of ADSK’s Autodesk Construction Cloud to enhance project delivery and maximize team coordination. This reflects the demand for ADSK services among its peers in the market.
On March 24, the company agreed to acquire The Wild for an immersive and collaborative workspace. With this acquisition, ADSK should be able to meet the increasing need for augmented AR and VR technology advancements.
During the fiscal 2023 first quarter (ended April 30, 2022), ADSK’s net revenue increased 18.3% year-over-year to $1.17 billion. Its gross profit rose 17.4% from the year-ago value to $1.05 billion. Non-GAAP income from operations grew 41.8% from the same period last year to $397 million, while its non-GAAP net income per share came in at $1.43, representing a 38.8% increase year-over-year.
Analysts expect ADSK’s revenues to increase 15.5% year-over-year to $1.22 billion in the fiscal second quarter (ending July 2022). Its EPS is expected to increase 30.2% to $1.58 in the ongoing quarter. The company has surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
The stock has lost marginally over the past month to close the last trading session at $170.96.
ADSK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has an A grade for Quality and a B grade for Growth. The stock is ranked #23 of 154 stocks in the Software - Application industry. Click here to see the other ratings of ADSK for Value, Momentum, Stability, and Sentiment.
Microsoft Corporation (MSFT)
Microsoft is a leading tech company that develops and supports a range of software products, services, devices, and solutions. It operates through three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Its offerings range from Skype, Microsoft Teams, and Office 365 Security and Compliance for Business to Xbox hardware, video games, Xbox content, and services in gaming.
On June 16, 2022, MSFT launched Microsoft Viva Sales, a new seller experience application that enriches any CRM system and delivers AI-powered intelligence to sellers in Microsoft 365 and Microsoft Teams. With AI-driven recommendations and insights, Viva Sales seamlessly lets salespersons personalize their customer engagements toward faster deal closure. This should gain broad reach among sellers amid the growing demand for hybrid working structures.
In the third quarter ended March 31, 2022, MSFT’s revenue increased 18.4% year-over-year to $49.36 billion. Its operating income increased 19.5% from the year-ago value to $20.36 billion, while its net income grew 8.2% year-over-year to $16.73 billion. The company’s EPS came in at $2.22, representing a 9.4% year-over-year improvement.
Analysts expect MSFT’s EPS and revenues to increase 5.6% and 13.5% year-over-year to $2.29 and $52.38 billion in the fiscal fourth quarter (ended June 2022). It surpassed the consensus EPS estimates in each of the trailing four quarters, which is excellent.
Shares of MSFT have gained 3.9% over the past month to close yesterday’s trading session at $254.08.
MSFT POWR Ratings reflect these solid prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. It has a B grade for Stability, Sentiment, and Quality. In the Software - Business industry, it is ranked #12 of 55 stocks.
Beyond what we’ve stated above, we have also given MSFT grades for Growth, Value, and Momentum. Get all the MSFT ratings here.
Rimini Street, Inc. (RMNI)
RMNI is a global provider of enterprise software support products and services. Its products and services seek to enable its clients to keep their systems operating and to remain in tax, legal and regulatory compliance; improve productivity; and allocate limited budgets, labor, and other resources to investments.
On June 22, 2022, the State Library of Victoria entrusted its Oracle software support and security to RMNI. On May 25, 2022, E-LAND Innople, an IT affiliate of the South Korean conglomerate E-Land Group, chose RMNI street support services for SAP S/4 HANA. This reflects the strong demand for the company’s services and customer reliability.
On June 1, 2022, RMNI expanded its stock repurchase plan from $35 million to $50 million, effective over the next four years. In addition, it prepaid $5 million on its outstanding term loan. This reflects the company's strong cash flows and should boost shareholder returns significantly.
In the fiscal 2022 first quarter (ended March 31, 2022), RMNI's total revenues increased 11.4% year-over-year to $97.91 million. Its adjusted operating income increased 30% from the year-ago value to $12.10 million, while its non-GAAP net income improved 9% year-over-year to $9.25 million. Also, its adjusted EBITDA stood at $12.89 million, up 20.9% year-over-year. The company's net income per share came in at $0.03, representing a 123.1% year-over-year improvement.
For the quarter ended June 30, 2022, RMNI’s EPS is expected to increase 13.3% year-over-year to $0.11, while its revenue is expected to increase 8.3% year-over-year to $99.23 million. It has surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 3.7% and 16.7% over the past three and six months, respectively, to close the last trading session at $6.
RMNI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. RMNI also has an A grade for Quality and a B for Growth and Value. The stock is ranked first in the Software - Application industry.
Click here to see the ratings of RMNI for Momentum, Stability, and Sentiment.
ADSK shares were trading at $175.69 per share on Friday afternoon, up $4.73 (+2.77%). Year-to-date, ADSK has declined -37.52%, versus a -18.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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