Why a new metaverse ETF wants nothing to do with Facebook's Meta
Facebook parent Meta (FB) wants to be the first company you think of when you hear the word metaverse, the nascent 3-D virtual world that could be the future of the internet. Heck, it’s why Meta CEO Mark Zuckerberg changed the social media giant’s name to Meta in late 2021.
But according to Subversive Capital founder and CIO Michael Auerbach, Zuckerberg’s efforts will fall flat.
“We actually believe that Meta isn’t the company that’s building out the Metaverse,” Auerbach told Yahoo Finance Live.
The CIO is so certain of his thesis, in fact, that he’s taken a permanent short position on Meta’s stock and purposely excluded it from Subversive Capital’s new metaverse-focused Punk ETF (PUNK).
“When we launched our metaverse ETF, we were looking at other….metaverse ETFs out there and we’re the only actively managed metaverse ETF,” Auerbach said.
“We’re including companies that are building the infrastructure and the applications for an interoperable metaverse which consumers want. And consumers today do not want Meta or Facebook or Mark Zuckerberg to be the custodian of their digital futures.”
Meta is sinking billions of dollars into its plans to turn the company into a metaverse-powered empire. Meta’s metaverse division, called Reality Labs, lost a whopping $20 billion in 2021 alone. And those investments aren’t expected to pay off for quite some time.
During Meta’s April 27 earnings call, Zuckerberg attempted to address investors’ concerns about how much the company is spending on its metaverse investments, saying that it will slow metaverse spending going forward while ensuring its Family of Apps business remains profitable.
“In Reality Labs, we're making large investments to deliver the next platform that I believe will be incredibly important both for our mission and business — comparable in value to the leading mobile platforms today. I recognize that it's expensive to build this — it's something that's never been built before and it's a new paradigm for computing and social connection.”
According to Auerbach, Meta’s problem is that consumers will look to other companies as they experiment with the metaverse. Indeed, Meta may be have trouble maintaining users' trust, especially in the wake of revelations by Facebook whistleblower Frances Haugen that the company turned a blind eye to a slew of problems — from the site stoking divisiveness to enabling human trafficking in developing countries.
“They are looking for more immersive experiences, but there’s a real concern about whether or not the Facebook platform is where people want the future of their lives to be,” Auerbach said.
Meta is currently working on a number of new virtual reality and augmented reality headsets outside of its existing Quest 2. It’s expected to release a new headset called Project Cambria later this year that will focus on work and is meant to replace your office laptop and desk.
Meta isn’t the only metaverse play around, though. Online game platform “Roblox” has its own kind of metaverse where users can move their characters between different interconnected worlds, while Epic’s “Fortnite” has evolved from a shooting game to a place where friends can meet up and watch concerts together.
Microsoft, Sony, Google, Nvidia and a slew of other companies are also investing in the technology in the hopes that it will be as important down the line as smartphones are today.
For now, the metaverse is still largely a niche product category. Whether it blows up and consumers get sucked into it remains to be seen. But if it does, Auerbach is hoping Meta isn’t a part of it.
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Got a tip? Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
