Facebook Bets Big On Metaverse: Why It's Important For The Industry, FB Stock

Earlier this month, Facebook Inc FB CEO Mark Zuckerberg told employees the company would put new emphasis on growing the metaverse.

"In the coming years, I expect people will transition from seeing us primarily as a social media company to seeing us as a metaverse company,” Zuckerberg reiterated Wednesday afternoon during the company's second-quarter conference call.

Here’s what the metaverse means, how Facebook can grow the sector and a way to invest in the sector.

The Metaverse: The metaverse was first coined in the 1992 science fiction novel "Snow Crash" by Neal Stephenson. The term represents a meeting of the physical world with augmented and virtual reality.

Companies like Roblox Corp RBLX, Fortnite and Animal Crossing from Nintendo Co NTDOY have been mentioned as metaverse companies connecting users to a digital world.

Venture capitalist Matthew Ball published an essay in 2020 highlighting the key characteristics of this new segment.

Facebook VP of VR and AR Andrew Bosworth said recently Facebook was already connecting to the metaverse with the Facebook Reality Labs division.

See Also: Facebook Q2 Earnings Takeaways: Big Revenue Beat, Cautious Outlook

Facebook’s Role: Facebook can transport a person into a room with another person using virtual worlds.

“But to achieve our full vision of the metaverse, we also need to build the connective tissue between these spaces, so you can remove the limitations of physics and move between them with the same ease as moving from one room in your home to the next,” Bosworth said.

Zuckerberg said that no single company will run the metaverse with many companies competing in an “embodied internet.”

“Our overarching goal across all of these initiatives is to help bring the metaverse to life,” Zuckerberg told The Verge.

A metaverse could be large for creators and artists and individuals who want to work and live far from urban centers.

Oculus, a virtual reality company acquired by Facebook, could be one of the growing companies helping consumers connect to the metaverse.

Zuckerberg called the Quest 2 from Oculus a hit and said he's surprised with the way people are using it.

“It’s [the metaverse] going to be accessible across all of our different computing platforms; VR and AR, but also PC and also mobile devices and game consoles.”

Zuckerberg thinks that many focus on the gaming side of things for the metaverse and highlights the growing entertainment sector of the market. Ultimately, Zuckerberg sees the metaverse as a hybrid of existing social platforms we have today — with the difference being the environment.

The Verge highlights some concerns with Facebook tackling the metaverse market given its pressure from some to break the company up and calls for the social media company to censor certain posts.

Having a virtual space would be harder to govern and moderate as it is still in the early phases.

Related Link: New Metaverse ETF Launches From Roundhill Investments: What Investors Should Know 

Metaverse ETF: Earlier this year, Roundhill Investments launched the Roundhill Ball Metaverse ETF META. The ETF highlights the potential of the companies seeking to transform the metaverse sector.

“This is probably the biggest endorsement of the metaverse to date, as Facebook is the sixth largest public company globally with a market cap of $1.1 trillion,” Roundhill Investments Vice President Mario Stefanidis told Benzinga.

Stefanidis said the announcement shows Facebook’s commitment to growing beyond a social media platform.

“Zuckerberg’s commitment of significant resources to the metaverse validates and legitimizes the attention it has gotten recently and squashes any notion that the concept is a passing fad.”

Stefanidis credits Ball, who is a member of the META ETF, for helping create an index that selects companies that are best tackling the metaverse using seven categories.

Ball was mentioned specifically by Zuckerberg when discussing the metaverse.

See also: How To Buy Facebook Stock

META holds 50 companies in the ETF, with quarterly rebalances set to take place. Facebook is the 15th-largest holding with a weight of 2.5% as of July 27. Top holdings in the ETF are NVIDIA Corp NVDA, Microsoft Corporation MSFT, Tencent Holdings TCEHY, Roblox and Amazon.com Inc AMZN.

“The BALLMETA Index’s expert council will evaluate whether Facebook has increase in relevance across the seven categories that constitute the index, which could potentially increase the company’s weight.”

FB Price Action: Facebook shares gained 1.49% to $373.28 in Wednesday's session and were pulling back by 3.5% in the after-hours session.