Deeply digging into the concept stocks of the Metaverse: Relying on concepts to rise, and ability to fall.
The Metaverse is not omnipotent, and pure enthusiasm is absolutely impossible.
On September 13, the first trading day after the Mid-Autumn Festival, ST Intercontinental (600759), a “talk show concept stock”, attracted widespread market attention. The public joke of a talk show actor made a stock successfully reach the daily limit, and the Shanghai Stock Exchange also took self-regulatory measures against abnormal trading behavior in accordance with regulations.
Before ST Intercontinental, the popularity of concept stocks has been high. From new energy sources to carbon neutrality to the recent Metaverse, it seems that stocks with a hot concept will be eagerly sought after by retail investors.
Since the Metaverse boom has been around for more than a year, not only the world’s leading Internet technology companies are scrambling to deploy, but even traditional companies have come to take advantage of its popularity.
For example, this year’s Mid-Autumn Festival, the A-share listed mooncake old Guangzhou Restaurant (603043), the old silk company Wansili (301066), and the high-end ice cream brand Haagen-Dazs have all launched “Yuanyu Mooncakes”. Users who buy physical moon cakes can receive related digital collections for free, which is essentially a marketing or even hype.
When a new batch of companies rushed in to stir up the Metaverse, the previous batch of “Metaverse Concept Stocks” had already proved by their collapsed performance: the Metaverse, which is still in the early stage of development, is not omnipotent, and just wants to rub off on the popularity of the Metaverse. It is absolutely impossible.
This article takes Zhongqingbao , Tianxiaxiu and Blue Cursor , the A-share listed companies that took the lead in “making a lot of noise” in the Metaverse, as examples, to see how they are the first batch of typical “Metaverse concept stocks” now. so.
Behind the sharp rise and fall, the routine is the same
According to the data of Oriental Fortune on September 9, among the more than 100 Metaverse concept stocks in A-shares, only 14 have a positive share price increase this year, and the others have fallen in different degrees. Among them, Zhongqingbao, Tianxiaxiu and Blue Cursor’s stock price fell by more than 37%, 44% and 49% respectively.
If the time line is extended, in the past year or so, the stock prices of Zhongqingbao, Tianxiaxiu and Blue Cursor have all soared by the east wind of the Metaverse.
Among the three companies, Tianxiaxiu has the smallest increase of 75.55%, Zhongqingbao has the largest increase of 419.88%, and Blue Cursor has increased by 158.35%.
Shares of the three companies have entered a falling channel after hitting highs in nearly a year. As of September 9, 2022, their closing prices have all been “halved” from their highs in nearly a year.Among them, the blue cursor fell the most, reaching 57.94%; the smallest decline was Zhongqingbao, which also fell 52.31%.
(The stock prices of the three companies have risen since 2021-2022.9.9 ups and downs/Good-looking business mapping)
Behind the sharp rise and fall of stock prices, what happened to the three companies?
Let’s first look at the former “Metaverse concept” leader Zhongqingbao. On September 6, 2021, Zhongqingbao announced that the company will launch a Metaverse game “Brewer Master”, which is a virtual and realistic fantasy linkage and simulation business. Players can not only construct the world and operate wineries according to their wishes in the virtual world, but also drink wine offline in the real world.
Under the blessing of the concept of the Metaverse, the share price of Zhongqingbao started to rise on September 7, 2021. As of November 11, the highest price reached 42.63 yuan per share, and the market value exceeded 10 billion yuan.
However, according to feedback from some players who have experienced this game, the so-called Metaverse game is, at best, a gimmick to sell wine online, and “Brewer Master” has not obtained the game version number issued by the state.
(Zhongqingbao “brewmaster” game / official micro)
On the one hand, it was suspected of being a hot spot, and on the other hand, the controlling shareholder and actual controller of Zhongqingbao took the opportunity to issue a reduction announcement, hoping to cash out at a high level.
In 2021, the Shenzhen Stock Exchange has issued letters of concern to Zhongqingbao for many times. In January 2022, the Shenzhen Stock Exchange issued another letter of concern, which asked Zhongqingbao to explain whether there were intentional hot spots, gimmicks, etc.;
On May 19, 2022, Zhongqingbao finally revealed its “vest” when replying to the inquiry letter from the Shenzhen Stock Exchange: Since February 28, the H5 version of “Wine Master” has been tested externally. The recharge flow is only 2444 yuan.
(The external test data of Zhongqingbao’s “Wine Master” 2.28-5.19, source: Zhongqingbao’s reply)
The huge momentum, the skinny reality, the high cash out of shareholders, coupled with the doubts of supervision and public opinion, the share price of Zhongqingbao is hard to resist the downward pressure. After hitting a high of 39.28 yuan on January 5, the share price of Zhongqingbao has fallen all the way, and has never returned to the previous high.
The logic of the skyrocketing stock price of Tianxiaxiu and Blue Cursor seems to be the same as that of Zhongqingbao.
On October 28, 2021, Tianxiaxiu virtual social product “Rainbow Universe” was launched, known as the “Chinese version of Meta”. After downloading the Rainbow Universe App, users can create a 3D virtual image in the Rainbow Universe, have their own 3D virtual house, and carry out social interactions, games and life.
(Rainbow Universe Virtual Scene/Official Wechat)
On November 18, 2021, Li Meng, the founder of Tianxia Show, released an open letter titled “Towards the Next Decade to Make Connections More Valuable”. In the open letter, Li Meng introduced the company’s 3D virtual social product “Rainbow Universe” based on blockchain technology, and said that Hong Universe will make the world show closer to the ultimate dream of social technology.
Driven by this, the share price of Tianxiaxiu immediately rose by the limit for two consecutive trading days. From October 28 to November 19, Tianxiaxiu achieved a daily limit of 7 in 17 trading days, and its stock price nearly doubled, hitting a high of 15.29 yuan.
(World Show 2021.10.28-2021.11.19 stock price trend/Oriental Fortune)
Blue Cursor’s share price hit a yearly low of 4.83 yuan on October 28, 2021. Entering November, its stock price has changed from the sluggish state in the past and began to make great strides. By January 4, 2022, in just two months, its stock price will reach a maximum of 12.84 yuan. And behind this surge, it is also closely related to the news of the Metaverse that is constantly being released.
For example, on November 26, 2021, the company stated on the interactive platform that Metaverse-related virtual human IP and technology, XR technology, virtual space and other businesses are the track that the company will focus on and fully invest in in the future. Support more than 1 billion funds to deploy the Metaverse. In early trading on November 26, the blue cursor rose nearly 20%, and finally closed up 7.16%.
(Blue Cursor Virtual Human/Company Official Wechat)
After regulatory inquiries and supervision, Tianxiaxiu announced on November 18, 2021 that after self-examination, the company’s main business has not undergone major changes, and the company has not participated in the research and development of AR, VR, MR and related hardware technologies, and has no related Hardware technology reserves or patents. At present, Hongyu Universe products have not yet been connected to the aforementioned hardware technologies. “As an experimental product, Hongyu Universe has great risks and uncertainties.”
It can be said that the “rainbow universe” of the world show is just a very distant “big cake”. The so-called Metaverse of Blue Cursor is essentially a different scenario for marketing, and currently has little to do with the Metaverse.
After a short-term frenzy, investors will leave in a hurry, and a sharp drop in the stock price will become inevitable.
The performance is down, and it is useless to rub the “Metaverse”
Before “getting on” with the Metaverse, Zhongqingbao was mainly engaged in the mobile game business, Tianxiaxiu’s main revenue came from the new media business, and the blue cursor’s main business was public relations and advertising services.
In the first half of 2022, blue cursor revenue was 16.711 billion yuan, a year-on-year decrease of 5.4 billion yuan or 24.43%. In the same period, net profit was 8.37 million yuan, compared with 576 million yuan in the same period last year, a year-on-year drop of 98.55%.
Specifically, in the first half of the year, BlueFocus was most affected by the Internet and application fields, with a year-on-year decrease of 1.81 billion yuan in revenue; followed by the game field, with a year-on-year decrease of 1.55 billion yuan in revenue.
In the financial report, the Metaverse business was described as “steady and improving”, but it also led to increased costs. Blue Cursor disclosed that in the first half of the year, the company’s development based on Metaverse’s business layout resulted in a R&D investment of more than 27.69 million yuan, a year-on-year increase of 36.54%.
(In the first half of 2022, due to the layout of the Metaverse, the R&D investment has increased/company announcement)
In addition, in the semi-annual report, BlueFocus also disclosed “digital assets” as “inventory” for the first time. The Metaverse business not only did not bring actual income, but also caused an asset impairment of 1.52 million yuan.
The decline in revenue and profits and the increase in operating costs are also the common points of the financial reports of Zhongqingbao and Tianxiaxiu in the first half of the year.
In the first half of 2022, Zhongqingbao’s revenue was 161 million yuan, a year-on-year decrease of 2.15%; net profit attributable to the parent was 11.63 million yuan, a year-on-year increase of 0.71%; non-net profit deducted was 7.16 million yuan, a year-on-year decrease of 18.77%.
The main income of Zhongqingbao comes from two major parts: online games and cloud services, and the revenue of the two accounts for 42.6% and 52.45% respectively. As mentioned above, from February to May this year, the total turnover of Zhongqingbao from the Metaverse game “Brewer Master” was only 2,444 yuan, which can be ignored.
In terms of expenses, the company’s total operating cost in the first half of the year was 86.236 million yuan, a year-on-year increase of 5.97%. Among them, R&D investment was 32.755 million yuan, a year-on-year increase of 34.35%. The main reason for the increase is the increase in R&D personnel and the increase in R&D investment.
The revenue of Tianxia Show in the first half of the year was 2.088 billion yuan, a year-on-year decrease of 2.9%; the net profit attributable to shareholders of listed companies was 169 million yuan, a year-on-year decrease of 20.1%.
(Tianxiaxiu 2022 first half financial data/company announcement)
In the first half of the year, the research and development expenses of Tianxiaxiu reached 92.38 million, a year-on-year increase of 12.72%. Tianxiaxiu explained that the increase in research and development expenses was mainly due to the investment in research and development of projects such as the WEIQ platform and Rainbow Universe this year. During the period, the company’s selling expenses increased by 57.54% year-on-year.
Judging from the financial reports for the first half of this year, Metaverse has not changed the fundamentals of the three companies, but instead exposed the serious weakness of its original business. And hard rubbing the Metaverse brings them, in addition to the sharp rise and fall of stock prices, there are also rapidly increasing costs of research and development, marketing and so on.
Put the false and preserve the true, when will the tide recede?
In March 2021, the “First Share of the Metaverse” was born. Roblox, a two-year-old company, landed on the New York Stock Exchange. The stock price closed with a 54.4% increase on the first day of listing, and its market value exceeded US$40 billion, detonating the “myth of making wealth” in the Metaverse.
In October of the same year, Zuckerberg announced that Facebook would be renamed “Meta”, all in “Metaverse”, which further boosted the global popularity of the Metaverse.
With the development of the global mobile Internet, a subversive innovation is urgently needed. The Metaverse has high hopes, carrying people’s super-imagination of the future.
McKinsey once predicted that by 2030, the impact of the Metaverse on the game market will be 108 billion to 125 billion US dollars, the impact on the advertising market will be 144 billion to 206 billion US dollars, and the impact on the virtual learning market is expected to be 180 billion to 270 billion US dollars . US dollars, the impact on the e-commerce field may have a scale of 2 trillion to 2.6 trillion US dollars.
Looking back on history, when a new entrepreneurial outlet emerges, there will always be chaos along with entrepreneurial enthusiasm.
The same goes for the Metaverse. Today, when people are still arguing about “what is the Metaverse”, all kinds of fancy behaviors have been staged one after another.
In essence, the Metaverse is a long-term technological wave, not just a vent, which may last for a dozen years or more.
In the view of Liang Youmei, CEO of Meta Greater China, the Metaverse is the next chapter of the Internet, but the construction of the Metaverse ecosystem cannot be completed by any company alone, but requires the industry to jointly build the future.
Ma Jie, vice president of Baidu, believes that for the Metaverse to become a reality, there are still three major technical difficulties that need to be broken through, including computing power, algorithms and the high cost of VR content production. At present, the Metaverse is still in the stage of excessive expectations, and the tide will not recede until the second half of 2022 or 2023.
The progress of history is a process of removing falsehood and reserving the truth, and the Metaverse is no exception. In the face of beautiful Metaverse stories, as “Securities Daily” commented, “How hot it is, the calmer the minds of investors will be.”
Intern Li Wei also contributed to this article
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