Apple Joins The Metaverse (NASDAQ:AAPL) - Seeking Alpha

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Thesis Summary

Apple (NASDAQ:AAPL) has go the latest successful a agelong database of tech companies to articulation the contention for the metaverse. Apple is reportedly seeking to physique an augmented world headset that could be unveiled this spring.

In this article, I volition reappraisal this product's specs and the antithetic ways successful which Apple could basal to monetize this large opportunity.

I deliberation AR/VR, successful conjunction with the metaverse, volition spell mainstream, and those who put present volition basal to payment handsomely.

Joining The Metaverse: The Reality Pro

Mark Zuckerberg has made nary effort to fell his tendency to put successful the Metaverse, going arsenic acold arsenic renaming his institution and, much notably, sinking billions of dollars into AR/VR. Microsoft, Inc (MSFT) has partnered with Meta Platforms (META) connected various AR/VR applications and has besides acquired Activision Blizzard (ATVI), pending regulatory approval.

Now, Apple has besides stated its ain intentions to participate the perchance lucrative tract of AR/VR, by launching its ain headset, which could perchance beryllium unveiled this spring. From what we know, Apple is looking to merchandise a high-end headset that volition encompass some VR and AR functionalities.

According to Bloomberg, the "Reality Pro" could person a terms tag of up to $3000, good supra comparable products similar the Oculus, which sells for astir $1500. Early reports besides claim that the Apple headset mightiness travel with a artillery battalion that attaches to the hep and usage the Mac's almighty M2 processors. It whitethorn adjacent diagnostic motorized lenses that tin set to each individual's eyes.

It's important to enactment that Apple has not confirmed nor denied immoderate of this yet. However, fixed the large accidental provided by the metaverse, I americium not amazed by this move.

Gaining Exposure to the Metaverse

The metaverse has brought astir undue amounts of skepticism successful the past year. Following the hype astir the metaverse, VR and crypto successful 2021, we are present successful a signifier wherever astir investors judge this is not a lucrative endeavor. Zuckerberg, for example, has received harsh disapproval for pursuing this path.

But portion integer existent property and virtual vacations whitethorn inactive beryllium a ways away, the thought is that we are going to commencement interacting otherwise with the satellite astir us, and galore of our integer experiences volition instrumentality a caller and improved form.

According to Technavio, the AR/VR manufacture volition turn astatine a CAGR of 46% from present until 2025, achieving a full marketplace size of $165 billion. Also, support successful caput that Meta has sold implicit $15 cardinal units of the Oculus 2 and that the Oculus app was 1 of the astir downloaded past year.

With the beardown marque loyalty that Apple has built implicit the years, there's nary uncertainty successful my caput that if the institution tin physique a merchandise that tin rival the Oculus 2, it volition beryllium capable to merchantability good implicit 15 cardinal units.

For Apple, which chiefly sells hardware, the accumulation of an AR/VR headset seems similar a earthy adjacent step. I deliberation of it arsenic an betterment connected the iPhone. With that said, the bundle is besides an important portion of the AR/VR equation, which is apt wherefore Apple is besides processing the world OS.

With Apple jumping into the ring, involvement successful the metaverse has resurfaced, and the excitement is palpable. Metaverse-related cryptocurrencies similar Decetraland (MANA-USD) and Sandbox (SAND-USD) person rocketed 80% and 40% successful days. The metaverse communicative could beryllium a large bullish unit for these integer assets if the crypto marketplace tin signifier different bull run.

Valuation

At today's prices, Apple has a compelling valuation, adjacent without factoring successful the imaginable of the metaverse.

10 twelvemonth DCF (Finbox)

Using a elemental 10-year DCF exemplary and utilizing expert estimates, we tin spot that Apple mightiness person immoderate upside. For now, Apple is acceptable to turn astatine a mean rate. After all, it has already profoundly penetrated the mobile telephone market. But however overmuch could Apple adhd to its maturation done the AR/VR market?

Last year, Meta was capable to merchantability 15 cardinal units of its VR headset. If Apple tin replicate this successful the adjacent mates of years, the institution would beryllium adding $30 cardinal to its apical line. This is assuming an mean retail terms of $2000.

But this is conscionable the extremity of the iceberg. This exertion could 1 time beryllium commonplace successful different devices specified arsenic laptops, and Apple could besides basal to marque a batch from royalties it receives from AR/VR-related software, overmuch similar it does present with the Apple store.

It is precise hard to quantify. By 2030, some forecasts foretell the VR/AR marketplace could scope a size of $451 billion. Even a tiny chunk of that would beryllium a important summation to Apple's revenues.

Risks

Of course, determination are risks we person to see erstwhile it comes to a caller and to an extent, unproven concern similar AR/VR.

For starters, Apple is precocious to the crippled erstwhile compared to Meta Platforms, which already has AR/VR headsets for merchantability and has been investing successful the metaverse for years. With that said, fixed Apple's expertise successful the accumulation of hardware and its beardown marque loyalty, the institution could summation an borderline successful the agelong run.

From a macro perspective, we person to contend that possibly this is not the champion clip to put wealth successful a high-end, non-essential product. We are inactive successful a tightening monetary cycle, and the US could apt participate a recession successful 2023.

Takeaway

In conclusion, I personally spot Apple entering the metaverse arsenic a immense triumph for the company. AR/VR headsets are a earthy hold of what we usage today, and I judge they volition go a communal household point erstwhile the exertion and terms scope a fixed level. With that said, I americium inactive waiting to bargain shares of Apple astatine a aboriginal signifier erstwhile the macro looks better.

Editor's Note: This nonfiction covers 1 oregon much microcap stocks. Please beryllium alert of the risks associated with these stocks.

If you similar the metaverse and privation to get vulnerability to it done crypto, this mightiness beryllium the work for you.

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