Meta (META) Set to Open Digital Store to Sell Virtual Clothes

Meta Platforms META is anticipated to launch a digital clothing store where users can purchase designer outfits for their avatars in the Metaverse, according to Reuters.

Brands like Balenciaga, Prada and Thom Browne will be initially available for purchase. A Meta spokesperson reported that the products would be priced between $2.99 and $8.99, which is way less than the real outfits by the designers.

Mark Zuckerberg wants to build the store as an open marketplace where developers can create and sell a wide variety of digital clothes.

The digital outfits will initially be available on Facebook, Instagram and Messenger. However, with the help of avatars, Meta wants to link user identity across Facebook, Instagram and other services. This would help in building the Metaverse as an interconnected digital world where users can gather.

Currently, in Meta Quest, users can set up their avatars to play video games, take exercise classes and participate in conference calls. The company intends to take it a step further by making VR a more social experience with Meta Horizon Home.

Earlier the Meta Horizon Home was just a gateway to the Metaverse. Meta, however, has recently updated the Horizon Home, which enables users to customize their virtual home, invite friends to socialize and coordinate the next gaming sessions.

Meta previously began testing tools to showcase and sell digital assets on Instagram. The new feature will be available initially to a handful of creators who are selling digital collectibles like art, images, videos, music or even trading cards as non-fungible tokens (NFT).

Meta’s recent initiatives show that the company is leaving no stone unturned to build the Metaverse as a self-reliant economy independent of the real world.

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. Price and Consensus

Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote

Meta’s Ad Revenue Issues: Will Metaverse Initiatives Help?

The US economy is expected to slip into recession due to the ongoing macroeconomic situation and geopolitical scenario.

The ongoing Russia-Ukraine war has hurt advertisers’ budgets. Rising inflation has also compelled global customers to pull back on their purchases.

Consequently, the slowing economy will trigger cuts in ad spending, which will impact revenues of ad-driven internet stocks like Meta and Alphabet GOOGL. This, in turn, will impact their stock prices.

Meta currently carries Zacks Rank #3 (Hold). Shares of the company have tumbled 51.6% in the year-to-date period compared with the Zacks Internet – Software industry and Zacks Computer and Technology sector’s decline of 53.1% and 32.3%, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alphabet shares have lost 26% in the year-to-date period compared with the Zacks Internet – Services industry’s decline of 28.9%.

Apple’s AAPL iOS changes have made ad targeting difficult, which in turn has increased the cost of driving outcomes. Measuring these outcomes has become difficult. Meta expects these factors to hurt advertising revenue growth throughout 2022.

Meta is facing increasing competition from other social media giants like Snap SNAP in the alternate reality space.

Snap recently launched a product similar to Meta’s. Snap has collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior, Gucci, which will be available to Snapchatters globally.

Nevertheless, Meta is expected to spend more than $10 billion over the next 10 years to build the Metaverse.

According to Bloomberg, the Metaverse market globally is expected to reach $800 billion by 2024. As the primary first mover in creating the Metaverse, Meta is expected to seize market share rapidly in the alternate reality space. This is expected to aid Meta’s revenues in the long term and impact shareholders’ wealth positively.

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