Virtual reality (VR): growing by an order of magnitude by 2026
24th February 2022 |
You have probably heard the phrase “parallel universe”. This edition of Frontier Tech Investor is dedicated to something rather similar – the world of virtual reality (VR).
In essence, VR is a computer-generated environment that you can access using equipment such as headsets and goggles.
Meta Platforms (a part of the company formerly called Facebook) is emerging as a pioneer in the deployment of VR technologies. It is becoming known for its Oculus Quest headset range.
The Oculus Quest headsets allow users to hang out and interact with friends in virtual environments, and to play virtual games.
Meta was the largest vendor of VR headsets in 2020, accounting for 38.7% of the global market.
The headsets don’t come cheap, with the price of headsets starting at £299 on Meta’s website.
The concept of VR might sound like just another consumer electronics fad. In reality, VR is shaping up to become a trend that could positively transform our lives for the better, and push the boundaries of the communications and entertainment worlds.
The amounts of money involved are huge. The global VR market is predicted to grow ten-fold, from $17.25 billion in 2020 to $184.66 billion by 2026.
Here at Frontier Tech Investor, we tend not to look for opportunities that exist with well-established and very large companies.
With absolutely no disrespect to Meta, we think that there are better stocks for investors who are interested in tech and who want to benefit from the rise of VR.
Take Immotion Group (LSE: IMMO), for example.
The company is a provider of VR technology at tourist attractions such as theme parks and aquariums. It also provides home-based VR experiences.
Whilst maintaining its in-person exhibitions, which can be found at places such as Shark Reef Aquarium in Las Vegas, Immotion is focusing on sales of its home VR offerings. This really excites us, because it’s giving itself the best chance to achieve scalability and commercial success.
It appears to be paying off, because its “Let’s Explore Ocean” megapacks are experiencing a surge in demand.
Specifically, Immotion sold around 35,000 of these megapacks in 2021, generating £2.5 million in revenues. This is a threefold increase on the £0.7 million figure recorded in 2020.
You can check out the megapacks here. They give you the experience of diving with sharks and swimming with whales in a hugely engaging VR experience. The pack also comes at a far cheaper cost than Meta’s (£79.99).
In addition, looking at the bigger picture, Immotion recorded H2 2021 total revenues of £6.6 million, more than double the £2.8 million figure reported for H1 2021.
Clearly, Immotion is just starting to realise its growth potential that we’ve foreseen for some time, aided by its in-home VR services.
This is as a time that Immotion has just released a new home-based VR product called “Vodiac”.
According to the company, the Vodiac product will:
… include a smartphone-compatible VR headset, seven free VR videos, 20 premium VR videos, and the ability to purchase further premium content from an extensive catalogue of VR videos across seven VR channels.
According to Immotion, the product will soon be available online via Vodiac.com and major retailer Amazon.
We’ve long been excited about the potential for Immotion. We are even more so now, thanks to the latest developments in its home-based VR business.
We reiterate our BUY recommendation. You can find the original recommendation here.
Buy list update
Kanabo Group (LSE: KNB)
Kanabo is a producer and distributor of medicinal cannabis products.
The company is on the cusp of realising its growth potential.
It has a potential acquisition in the pipeline, which you can read about here. Further, it has entered one of the most exciting areas of the healthcare market: telehealth.
Telehealth is the provision of medical-related services remotely, in that the patient and the medical professional are not in the same location when the services are delivered.
According to PR Newswire, the value of the telehealth market is set to increase from $70.5 billion in 2020, to $598.3 billion in 2028.
On 22 February 2022, Kanabo announced it has bought The GP Service in a £14 million deal.
The GP Service is one of the leading telemedicine and online primary healthcare providers in the UK.
It allows users to see a UK-registered GP in just half an hour for a price of £39.99 and receive a prescription in under an hour from one of 4,200 participating pharmacies (for an extra £7.49).
More importantly, the purchasing of The GP Service will provide Kanabo with another avenue in which to market its cannabinoid (CBD)-laced products.
The possibility of Kanabo becoming a pioneer in both CBD products and telehealth makes for an extremely exciting investment proposition. It reinforces our positive long-term view.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
Ocean Outdoor (LSE: OOUT)
Ocean Outdoor is an operator of premium advertising space in the UK.
Its full-year figures for 2021 are very encouraging.
Over the period, the company recorded revenues of £124.4 million. This is a 44.3% increase on the figure recorded in the previous year.
Considering that part of 2021 was hampered by the pandemic, and that Ocean’s customers – the advertisers – are dependent on footfall, this return is impressive and pays testament to Ocean’s strong business model.
Ocean is continuing to expand its commercial operations. It currently has a number of ongoing contracts at some of the UK’s touristic and financial hotspots.
For example, it currently has a £25 million contract at St. James Quarter in Edinburgh – the £1 billion retail shopping centre in that city.
It also has an ongoing £30 million contract with British property company Canary Wharf Group.
Now that Ocean is largely free from the shackles of lockdowns in the UK and continental Europe, we are expecting it to deliver a strong year.
We reiterate our HOLD recommendation on the stock. You can find the original recommendation here.
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.
EQTEC (LSE: EQT) – EQTEC is a unique, green energy company that is setting the standard for sustainable energy production. Its innovative gasification technology can convert up to 50 feedstocks into sustainable energy sources. It plays a pivotal role in reducing methane emissions from rotting waste at landfill sites. This matters because methane can be up to 86 times more potent than carbon dioxide at trapping heat in the atmosphere. As a result, we believe that the company has a key role to play in helping policymakers achieve stringent emissions targets in the face of COP26. You can find the original recommendation here.
MPAC Group (LSE: MPAC) – MPAC is a leading provider of packaging solutions. The company is helping to deliver efficiency gains to customers through its automated processes that harness some of the most powerful technologies of the modern day. This includes augmented reality (AR) and the use of “smart” machinery. With MPAC, it’s the machines telling the human what to do, rather than the other way round, with the result that human error is eradicated and that manufacturing lines are smoother than ever before. You can find the original recommendation here.
Volex (LSE: VLX) – Volex is a global manufacturer of power and connectivity products. This includes power cables, fibre optics and charging plugs. It might sound a little basic – however, these are critical mechanisms which are powering some of the key technologies of the modern day. These technologies include electric vehicles (EVs), artificial intelligence (AI) and big data networks. Volex has huge credibility behind it, especially as it does business with some of most widely recognised companies in the world, including Tesla. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Junior Analyst, Frontier Tech Investor
