Morgan Stanley names the stocks to watch as luxury brands enter the metaverse

Published Tue, Nov 23 20219:30 PM EST

Analysts at Morgan Stanley have named the stocks to watch as luxury brands turn their attention to the metaverse, picking one stock in particular that it says is best positioned to benefit from the trend. The term "metaverse" was first coined by author Neal Stephenson in 1992 to describe a computer-generated world accessible through virtual reality headsets. The term resurfaced in popular discussions after Facebook changed its corporate name to Meta last month. While opinions differ on what metaverse means, Morgan Stanley defines it as a "virtual world for immersive co-experiences where users can explore vast numbers of experiences concurrently." With an addressable market worth $8 trillion , the metaverse is "most likely to be a next generation social media, streaming and gaming platform, " according to Morgan Stanley. Companies such as California-based video gaming platform Roblox , South Korean internet giant Naver and Meta (previously known as Facebook) are already in the thick of building their own metaverses, equity strategist Edward Stanley said in a note on Nov. 16. While the metaverse will likely be a years-long process, the rising popularity of non-fungible tokens (NFTs) and social gaming present two "nearer-term opportunities" for luxury brands, Stanley added. The investment bank noted that the NFT market has enjoyed "explosive growth" over the past 12 months — with quarterly transactions valued at over $10 billion in the third quarter of this year, compared to under $28 million in the same period a year ago. Yet, NFTs for luxury brands will account for less than 1% of the total NFT transaction value in 2021, Stanley noted. This could change within a "relatively short time frame," Stanley opined, as demand for luxury NFTs should "accelerate dramatically" as they become more widely used within the metaverse. Potential game-changer The investment bank believes that metaverse gaming and NFTs could constitute "10% of the luxury goods addressable market by 2030" as well as a "50 billion euros revenue opportunity" and an "approximately 25% uplift" to the industry&