The metaverse is a term coined to refer to a virtual reality world. Within the metaverse, a user can do whatever they want. This can apply to gaming, building items, shopping and even education. With it fast gaining traction, I obviously want to look for ways that I can potentially profit. Here’s one top metaverse stock that I don’t think has received enough coverage as part of this trend.
A smart metaverse accessory
The company I’m referring to is Sony (NYSE:SONY). It’s a well-known brand, with a wide range of operations. These go from consumer electronics to music production. The stock is listed in both Tokyo and New York, with the share price up 19% over the past year.
Aside from making money from the areas of the business that have been operating for decades, there’s one area that’s caught my attention recently. This is with the manufacturing of virtual reality (VR) headsets. The original headset is being replaced with the upcoming VR2 model. Some of the details around this show that Sony is serious about creating something special. These include sensory features such as eye-tracking, vibrations and an ultra-high-definition display.
In the first instance, this is going to support sales of PlayStation, to which players are going to connect the headset. But in my opinion, the investment in this technology is for a broader future use beyond gaming. I think that Sony is trying to get a head start on VR headsets so that as the audience grows, it’s best placed to take advantage.
Sony isn’t the only company making VR headsets. Meta (the rebranded Facebook) and Apple are also rumored to be manufacturing their own versions. But in the world of business, we all know that being first to market can be a huge plus if a company gets it right.
A lower-risk alternative
Another reason why I think Sony is a top metaverse stock to buy is that it’s low risk. I’ve written before about how I like Roblox, the virtual game developer. Yet Roblox shares are very volatile. In my opinion, if the metaverse takes off then Roblox shares could explode higher, but if not then the company will really struggle. As an investor, that’s quite a risky concept.
With Sony, I don’t see a similar situation. The business is profitable thanks to a variety of different income streams. The latest quarterly results showed income from eight different divisions. Even the relatively small financial services division generated ¥24.5bn in sales during the three months.
What I’m getting at here is that even if VR headsets don’t take off as part of the metaverse, I don’t think the Sony share price is going to collapse. But if the headsets really do become a big thing, with each of us having one at home, then I see good upside for Sony shares.
A top metaverse stock
I’m considering buying Sony shares at the moment based on the above. There’s the risk that other companies will make better headsets, or that game developers will make users buy their versions. I also have to be aware of the risk that Sony may decide to focus efforts on other divisions. But as things stand, I think it could be a smart buy.
Jon Smith has no position in any firm mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.