ABC News Today

In the year since Mark Zuckerberg unveiled the multibillion-dollar turnaround of Facebook Inc. to develop an immersive virtual world, the investment industry has launched a plethora of products to tap into the frenzy of the metaverse. For investors, the timing could not have been worse.

The four dozen exchange-traded funds and mutual funds in Bloomberg’s database that have the word “metaverse” in their description, many of them introduced in the past 12 months, have sunk in the bear market . The Roundhill Ball Metaverse ETF, the largest of these, is down 51% in the past year.

The declines accelerated Thursday after shares of the renamed Meta Platforms Inc. Zuckerberg’s fell the most in eight months. The CEO and co-founder asked investors to be patient with the huge investments in the metaverse, even as the company reported a slowdown in its main source of revenue, digital advertising.

“It’s one thing to rebrand, it’s another thing to say, well, we don’t see substantial profits from the metaverse” for years, said Dennis Dick, head of market structure and owner trader at Bright Trading. “Investors in this market are not going to wait eight years to see substantial profits.”

The performance of metaverse funds shows the risk of piling into an unproven industry, regardless of the price you pay: the companies that are considered the building blocks of the metaverse, digital worlds where users can socialize, play and do business. they’re just the kind of stocks investors are fleeing right now. Many of them have little or no income and are sold at high valuations, with the promise of fast growth and big profits in the future.

The 18 metaverse funds that have been around for a year or more are down 33% to 66% over the past 12 months. Some of the funds’ popular stocks have also been hit: Meta was down 69% at Thursday’s close, while gaming company Roblox Corp. is down 42% and graphics chip maker Nvidia Corp. has fallen by 46%.

And fund industry heavyweights are still launching products, along with marketing materials to explain the sector. Allianz Global Investors launched a fund last week, while Legal & General Group Plc and Invesco Ltd. they have done so for the past few months as well.

The metaverse is still both an idea and an actual product for many companies. But the dramatic change in the market environment means that most investors have no stomach for long-term bets and are looking for companies with steady growth rates and tangible profits.

Even bulls consider the metaverse a long-term bet. Matthew Kanterman, the director of research at Ball Metaverse Research Partners, said it’s still “very early innings.”

For Meta, changing its name and “investing everything into it and investing the amount they’re investing into it today” is a big commitment, given that the return might not come for 10 to 15 years, Kanterman said. That’s “an investment cycle that’s nearly two to three times longer than the average cycle for any new product.”

Technical letter of the day

A Weak Forecast for Amazon.com Inc. sparked a 12% sell-off in the e-commerce giant’s shares. Its market value briefly dipped below $1 trillion after the company projected the slowest holiday quarter growth in its history, while sales of its important web services business missed estimates. There are only three other companies on the elite list of American companies valued at more than $1 trillion: Apple Inc., Microsoft Corp. and Alphabet Inc.