Discovering another world…
7th October 2021 |
The physical world that we know has been in existence for around 4.5 billion years.
Up to this point in time, it’s been the only world that we’ve ever known, or even suspected.
But recently, it has become apparent that there is, after all, another world out there.
We’re not talking about a world beyond the realms of the Earth’s atmosphere, either.
We’re talking about a digital world, that is providing endless possibilities to humans as we speak – the metaverse.
A metaverse is in essence, a virtual gaming world that allows interaction between humans. It’s often spoken about as a singular, but the reality is our future will likely exist of many “metaverses” and our ability to jump from one to another will become seamless and easy… just a regular part of existing online.
Many of the things we do in our physical life can be replicated in the metaverse, including buying land and property, exchanging goods, delivering services and socially connecting with friends.
The metaverse also opens up the potential for new economies.
Instead of an economy existing in different physical jurisdictions, every metaverse might have its own economy, or shared economy with other virtual worlds.
We’re seeing the early iterations of virtual world economies through groundbreaking entertainment that gamers are flocking to all over the world, especially in Asia.
The idea of a play-to-earn economy, where gamers compete against each other in virtual games for money, is new, novel but a fast-growing area of online existence.
Also, as is often required in these kinds of games, you need virtual assets to participate.
These aren’t just any old assets, though.
They are assets which are based on blockchain technology – a strong area of interest to us here at Frontier Tech Investor.
Specifically, these in-game assets are often expressed as non-fungible tokens (NFTs) that are built on the principles of blockchain. NFTs can be anything from pixeled avatars to footage of infamous NBA basketball moments.
They are comprised of unique code that gives them rarity and value.
Many metaverses even have their own specific cryptocurrency tokens tied to them, which are available on crypto exchanges.
A prime example of this is Axie Infinity, the world’s most popular blockchain-using metaverse, which issues its own AXS tokens.
In fact, the company reached a $30 billion valuation in late September, making it twice as valuable as the popular US gaming retailer GameStop.
The speed of growth in play-to-earn virtual worlds based on blockchain technology is astounding. Axie’s growth, in particular, is off the chart.
Axie generated just $801,432 in revenue in the whole of 2020. In just the month of August 2021, it has generated $364.4 million in revenue. This is just one example of how blockchain networks and virtual worlds are creating real-world value.
The popularity of the metaverse is such that it is attracting the attention of the biggest corporates in the technology industry.
On 27 September 2021, Facebook revealed it will be investing $50 million in global metaverse research to help develop relevant products.
It’s a significant step, that highlights how big corporates are seeking to stay relevant to this new, exciting world.
So, what relevance does this have to our portfolio?
Well, it shows the rise in popularity of the metaverse, which beautifully combines elements from the virtual reality and blockchain-based networks.
We have captured both of these fast-growing trends in the Frontier Tech Investor portfolio.
Firstly, we have done so through Immotion Group (LSE: IMMO), a provider of virtual reality technology at tourist attractions, such as aquariums and theme parks.
The company is once again enjoying footfall at its locations after a muted lockdown period.
It has a number of exciting virtual reality solutions, spanning from Sydney in Australia to Florida in the United States.
Its virtual reality provides a metaverse of its own, providing a unique, immersive experience for all (minus the use of blockchain).
One company that does leverage the use of blockchain networks, is Mode (LSE: MODE).
Mode is a financial ecosystem that allows the managing and exchanging of crypto assets such as bitcoin.
Its upside potential looks hugely promising, in line with the excellent long-term potential of bitcoin, and the growing number of people and corporations onboarding into the world of crypto.
The bottom line is this: as the metaverse and blockchain grow in popularity, both companies have excellent prospects for long-term growth.
Buy list update
Velocys (LSE: VLS)
Velocys is a manufacturer of sustainable aviation fuel (SAF). The SAF is derived from gasified wood-chips using Velocys’ Fischer-Tropsch catalytic converter.
Its half-year figures are very encouraging.
For the six months ended 30 June 2021 (H1 2021), the company announced revenues of £8.2 million. This is up from £0.2 million in the same period in the previous year (H1 2020).
In addition, gross profits rose 3,200% from H1 2020 to H1 2021. Losses also dropped from £2.6 million in H1 2020 to £2 million in H1 2021.
Clearly, the company is starting to successfully commercialise its SAF, which is making for a healthier balance sheet.
The past six months have been momentous for Velocys. It has seen the company open its first commercial scale biofuel refinery in Japan.
And, also in Japan, Velocys powered the first commercial flight in the country using its SAF in June 2021.
We believe that Velocys will build on this success, and help to drive the transition towards a greener airline industry, with more companies looking to adhere to strict emissions targets being prescribed by governments across the world.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here. See the portfolio for the latest advice.
Surface Transforms (LSE: SCE)
Surface Transforms is a manufacturer of carbon ceramic brake discs for the automotive industry.
On 23 September 2021, the company announced the launch of a new carbon ceramic brake disc for the McLaren 765LT supercar.
The brakes have a high level of durability, in the sense that they can operate at roughly 200 degrees Celsius greater than traditional OEM brake discs.
At the same time, the brake discs are lightweight, and greatly reduce energy dissipation through noise and engine vibration.
Craig Couzens, business development manager at Surface Transforms, noted: “The brake discs fitted to today’s high-performance supercars have to withstand track day induced heat levels but also be durable enough for long life road use – our new kit delivers both”.
The specialist McLaren brake discs add to a growing list of Surface Transforms’ supercar collaborations, which now includes Ferrari, Porsche and of course McLaren.
We believe Surface Transforms’ niche, high-performance brake discs will continue to attract attention from high profile automotive manufacturers around the world.
And finally, here is a quick word on its latest half-year financial figures.
For the six months ended 30 June 2021 (H1 2021), the company announced revenues of £1.2 million, which is an increase of 33% on the same period in the previous year (H1 2020).
In addition, gross profits rose 27% from H1 2020 to H1 2021.
So, the signs are looking positive for Surface Transforms, in a business and financial sense.
We reiterate our BUY recommendation on the stock. You can find the original recommendation here. See the portfolio for the latest advice.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good, this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Kanabo Group (LSE:KNB) – one of the world’s most controversial investment ideas is based on the legalisation of medicinal and recreational cannabis. It’s sweeping across Canada and now the United States. Both countries are leaders on the way to legalisation. In Australia a similar path is being followed. And now the UK is on the same track. Kanabo is one of the newest and best plays in this huge investment opportunity. You can find our recommendation here.
Mode Global Holdings (LSE: MODE) – our most recent recommendation, Mode, looks to revolutionise the way in which payments are being conducted. Its platform provides a seamless way to manage and spend assets from both monetary systems; the old, fiat currency system, and the new, crypto and digital assets system. The platform has unique features, such as the potential for you to earn interest on your bitcoin holdings. We see the popularity of Mode rising in line with the wider adoption of cryptocurrencies as a means of payment. You can find the original recommendation here.
Argo Blockchain (LSE: ARB) – Argo is a history-making crypto mining company. It is the first pure-play crypto mining company to list on the London Stock Exchange. Its listing on the exchange shows how quickly the transition to the new money system is taking hold. Through its powerful mining rigs, the company has the capability to mine thousands of bitcoin each year, earning potentially lucrative returns in line with the price of bitcoin. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
