Meta’s ambitions to transform itself into a metaverse powerhouse on the scale of Facebook was met with another round of doubt as Needham analysts downgraded the social media giant from “hold” to “underperform.”
In the July 11 downgrade, analyst Laura Martin advised investors to “use Meta as a source of funds,” saying the firm’s analysts decided to “lower our estimates because we believe cost growth will far exceed revenue growth for the next 2 years.”
Predicting lower-than-expected third-quarter revenues and that Meta will lower its own full-year financial outlook in its Q2 earnings call this month, Martin said the firm was concerned about Meta’s ongoing plans for heavy metaverse investments.
In February, the firm’s shares plunged a staggering 20%, wiping $200 billion off Meta’s market cap after it missed analysts’ Q4 earnings estimates — which would have been more than covered by its $10 billion metaverse investments.
See also: Meta Earnings Hit By Metaverse Investments As Stock Plunges 20%
Meta did not fall alone, however. The native cryptocurrency tokens of four main, blockchain-based metaverse projects fell along with Meta’s shares.
The two biggest projects, Decentraland and The Sandbox, saw the price of MANA and SAND tokens — the only source of in-game payments accepted — drop more than 5% each.
Non-fungible token (NFT) builder Enjin, whose MetaverseMe builds a virtual NFT avatar of the user, fell 7.3% and ApeCoin, the governance token of the just-conceived metaverse of top NFT collectable maker Yuga — home of the Bored Ape Yacht Club — dropped 6.4%.
How much impact the Meta downgrade had is debatable. The entire crypto market slumped, and all four cryptocurrencies are down 85% to 89% since the November all-time high.
Around the Metaverse
Skateboarding legend Tony Hawk announced on July 13 that he’s building “the largest virtual skatepark ever made” — how much competition was there? — in The Sandbox, Animoca Brands’ blockchain-based metaverse.
There will, of course, be an NFT drop featuring avatar-wearable and useable boards, as well as gear and clothing with “in-game functionality for experiences.” So maybe the original skateboard Hawk used to land the first-ever 900 at the 1999 X-Games will help your avatar do it, too.
Animoca Brands managed to be an outlier financially during a broadly tumbling NFT and crypto market by raising $75 million, giving it a valuation of $5.9 billion, the firm said on July 12. While that was a bit higher than its previous venture round, as Decrypt noted, it was also a smaller raise.
Meanwhile, the city of Shanghai’s government announced plans to become a metaverse hub on July 8, aiming to cultivate a $52 billion industry that seeks to attract or build 10 major and 100 smaller metaverse technology companies. It will also invest $1.5 billion in a Metaverse Development Fund.
And in a ruling that could make for some mighty interesting metaverse chases in the long term, a U.K. court has allowed the founder of an Italian online gambling firm Microgame to serve legal documents via NFTs, CoinDesk reported. The firm’s CEO, Fabrizio D’Aloia, claims he was defrauded of more than $2.3 million worth of stablecoins by digital wallets that were fake crypto exchange addresses.
“This is so important because it shows the court’s willingness to adapt to new technologies and embrace the blockchain and actually step in to help consumers where previous legislation and regulators simply could not do that,” said Joanna Bailey, an attorney with Giambrone & Partners LLP, who worked on the case.
The filings have been deposited in the two wallets against their anonymous owner or owners.
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