The metaverse economy can potentially grow to a $8 billion to $13 trillion total addressable market by 2030, according to a Citi
"We believe the Metaverse is the next generation of the internet--combing the physical and digital world in a persistent and immersive manner--and not purely a Virtual Reality world," the report reads. "A device-agnostic Metaverse accessible via PCs, game consoles, and smartphones could result in a very large ecosystem."
The bank says that the 5 billion user base is a broad one that includes mobile users. If the metaverse is confined to only VR/Augmented Reality (AR) devices, Citi expects the user base to be closer to 1 billion.
The concept of the metaverse is not new, Citi noted in its report, but a spotlight has been put on the idea recently due to Big Tech interest, especially after Facebook CEO Mark Zuckerberg announced the company's rebranding to Meta Platforms
Currently, the most popular way to experience the metaverse is playing video games through VR/AR headsets, according to Citi. Looking ahead, Citi forecasts that the metaverse has potential to become "the next generation of the internet or Web 3."
However, before the metaverse can grow to a digital ecosystem of that size, Citi says there will need to be significant infrastructure investments.
"In the current state, the internet infrastructure is unsuitable for building a fully-immersive content streaming Metaverse environment, that enables users to go seamlessly from one experience to another," the report's authors wrote. "To make the vision of Metaverse a reality, we expect significant investment in a confluence of technology. Low latency--the time it takes a data signal to travel from one point on the internet to another point and then come back--is critical to building a more realist user experience."
Citi says investments will also be required in areas like storage, network infrastructure, consumer hardware and game development platforms.
Investors looking for opportunities in this growing market should consider exchange-traded funds that offer exposure to sectors including technology, fintech, semiconductors, and gaming.
Here are some metaverse-exposed ETFs:
Global X FinTech ETF
FINX follows an index whose holdings include companies that are leaders in the emerging financial technology (often shortened to fintech) sector, with over 75% of its holding being focused in the information technology sector. Top holdings include Block
SPDR S&P Software & Services ETF
XSW tracks the total return performance of the software and services segment of the U.S. equity market. The fund's top holdings include Gitlab
Roundhill Ball Metaverse ETF
META tracks the Ball Metaverse Index, which consists of a portfolio metaverse-focused companies, operating in industries including computing, networking, virtual platforms, payments, and hardware. Top holdings include Roblox
ProShares UltraPro QQQ
TQQQ is a levered fund that seeks to deliver results that correspond to 3X the daily performance of the Nasdaq 100 Index. Historically, technologies companies have driven TQQQ's performance, meaning ETF could benefit from the growing metaverse.
