Best Buy could cash in from rise of the metaverse, analyst says

Customers are waiting outside a Best Buy store in downtown Toronto, Ontario on November 23, 2020 to pick up their online orders.

Geoff Robbins | AFP | Getty Images

As businesses and consumers become more interested in the meta-verse, Best Buy could make money by selling more virtual reality headsets and more expensive computers, says one analyst.

A research note released Monday by Loop Capital Markets said the consumer electronics retailer is well positioned to harness enthusiasm for non-fungible tokens, games and socializing in a virtual world. Best Buy is the largest PC retailer in the country, has large stores where shoppers can try on different headsets and has a team of technical experts who pay to help consumers with the setup, said Anthony Chukumba, CEO of the stock research firm.

He reiterated Loop’s purchase estimate and price target of $ 150, about 52% higher than where Best Buy is currently trading. Best Buy shares have risen about 1% since Monday noon. They have fallen by about 9% over the last 12 months.

A growing list of retailers from Nike to Ralph Lauren has dipped their toes in the metaverse. Nike bought the virtual sneaker company RTFKT for an undisclosed amount in December. Ralph Lauren has experimented with ways people can visit or shop in virtual stores on gaming platforms like Roblox and Zepeto.

For Best Buy, the economic option is even simpler, Chukumba said: Consumers may need to upgrade computers to higher-resolution monitors and purchase additional equipment from monitors to microphones. It could drive a “massive PC upgrade cycle” and also one for smartphones, he said.

Loop based his views on a conversation with an unnamed CEO and venture capitalist specializing in NFTs, blockchain, decentralized finance, gaming and the meta-verse, Chukumba said. He added that the person has been working in the technology industry since the late 1990s.

With the meta-verse, two other product categories – virtual reality and artificial reality devices and video game consoles – can also get steam, Chukumba said. Best Buy already has relationships with the major manufacturers selling these devices, including Meta (formerly known as Facebook and the owner of Oculus), Sony and Apple. Apple is expected to have a VR / AR product on the way soon.

Best Buy also has stores where consumers can try and compare different headsets in person.

Another aspect of the meta-verse could also help Best Buy, Chukumba said. Technology can make it faster and cheaper to run inventory simulations that inspire more efficient ways to operate.

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