Citi’s vision of the metaverse goes beyond gaming and virtual reality.
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Citi is the latest Wall Street player to issue a bullish forecast for web3 and the metaverse, which describe a future vision for the internet built around decentralized technologies and virtual worlds.
The metaverse economy could be an $8 trillion to $13 trillion total addressable market by 2030, Citi said in a research report published Thursday.
The bank’s definition of the metaverse goes beyond sticking to virtual worlds, like gaming and applications in virtual reality. Citi’s broad vision of the metaverse includes smart manufacturing technology, virtual advertising, online events like concerts, as well as digital forms of money such as cryptocurrencies like bitcoin.
Under this umbrella, the metaverse could see 5 billion unique internet visitors by the end of the decade, driving trillions of dollars in revenue in this next-generation of the internet, the bank said.
Citi is just the latest banking giant to call the metaverse and web3 a trillion-dollar opportunity. In research published in December, Goldman Sachs put a $12.5 trillion number on the space, in a bullish outlook that assumed one-third of the digital economy shifts into virtual worlds and then expands by 25%.
Bullish forecasts from Citi and others come even as investments tied to the metaverse have underperformed of late. A huge amount of money already has flowed to companies addressing the space, meaning some of the growth is already baked into equity prices.
Chipmaker Nvidia ’s (ticker: NVDA) plans for the “omniverse,” which is its vision of the metaverse including industrial applications and innovations in artificial intelligence, remain a key part of analysts’ optimistic outlook for the stock. Nvidia, which has a market capitalization of more than $700 billion, has seen its share price jump 110% over the past year.
Nevertheless, many view Nvidia as an attractive investment for other reasons; analysts continue to underscore the strength of a core business that sells computer chips for applications in gaming and high-powered data centers.
Indeed, more pure metaverse plays have been far less fortunate. Roblox
(RBLX), a video game company that is a platform for building and experiencing virtual worlds, has seen its stock price plummet by 27% across the last year.
The damage is much the same in exchange-traded funds tracking the space.
The Defiance Digital Revolution ETF (NFTZ) is down 29% since it launched less than four months ago. The Roundhill Ball Metaverse ETF (METV) has lost 19% since it launched last July.
“Despite heightened investor interest, average metaverse ETF performance has been poor YTD reflecting a concept fast approaching the peak of inflated expectations on its hype cycle,” a group of strategists at JPMorgan Chase wote in a report last week.
They added that due diligence in ETF investing was crucial, as metaverse-labeled ETFs can range from anything in the tech space from gaming to cybersecurity. Indeed, as Barron’s has reported, metaverse ETFs are in essence side-bets on the tech-heavy Nasdaq Composite index.
And, as Barron’s has reported, tech stocks continue to face headwinds. The Dow Jones Industrial Average has declined 4% so far this year; by comparison, the Nasdaq has fallen 9%, and remains in correction territory, down more than 10% from its recent high in November.
Write to Jack Denton at [email protected]
