Virtual reality gets dose of reality as metaverse stocks drop

Tech

Published: 28 Jul. 2021, 19:05 Updated: 28 Jul. 2021, 19:54

Virtual reality gets dose of reality as metaverse stocks drop

Visual effects company Giantstep produced the avatar members of aespa. [SM ENTERTAINMENT]

The metaverse is causing volatility in the stock market as share prices bounce around depending on their association with the virtual worlds.

Augmented reality (AR), virtual reality (VR) or developers of these synthetic universes are most often considered metaverse-related businesses.

Alchera, a video technology company, made the mistake of saying it “has no business model directly related to the metaverse” on Tuesday morning, and its price dropped 25 percent.

Alchera had been considered a metaverse-related stock. The company said its technology was being exclusively supplied to Naver Z’s metaverse app Zepeto in an initial public offering (IPO) press conference held last year. The company listed on Kosdaq on Dec. 21, 2020.

After daring to even say it was not a metaverse company, its stock dropped from its peak of 53,000 won on Monday to 39,700 won Tuesday. The price slightly recovered on Wednesday to close at 40,000, but still much lower than its peak price.

AR platform developer Maxst hit the daily gain limit of 30 percent and closed at 39,000 won on Tuesday when it listed on Kosdaq. It peaked again on Wednesday, closing at 50,700 won, also hitting the daily gain limit.

Maxst has partnered up with some of Korea’s biggest companies to develop metaverse platforms. The list includes Samsung Electronics and Hyundai Motor, as well as SK Telecom, KT and LG U+.

The metaverse influence on the Korean stock market has been ongoing since the beginning of this year. Giantstep, a visual effects technology company, started at 28,600 won on March 24 when it listed on the Kosdaq and peaked at 103,100 won on July 20, a 260 percent increase. It closed at 84,200 won on Wednesday.

Giantstep is known as the company that produced the virtual avatars for girl group aespa.

The prices of metaverse-related stocks, such as Wysiwyg Studios and YJM Games, soared in early July then plummet this week as Alchera raised the issue of what defines a metaverse company.

Experts warn that investors need to be cautious when investing in a growing market. The idea of the metaverse has not been properly defined yet and thus needs to be approached carefully, they say.

A user looks at cherry blossoms in a virtual park produced within Naver Z's Zepeto metaverse. [SCREEN CAPTURE]

Chang Byung-gyu, chairman of game developer Krafton, said at the company’s IPO press conference Monday that the company refrains from using the word metaverse in its business model because of the uncertainty of the idea.

“The term metaverse is vague, idealistic and it is exaggerated from it what it really is,” Chang said. “We will be readying our technology to present something when we get a clear idea about the metaverse.”

“The metaverse market is in the very beginning stage of growth, so it’s difficult to say that the local companies have produced services that are comparable on the global level,” said Lee Hyo-seob, head of the financial service industry department of the Korea Capital Market Institute.

“We will have to see whether this whole fad was a bubble or not, but it is a fluctuating market so investors need to take extra care to discern which company is worth investing in.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]