The coronavirus pandemic provided a boost, even if it was temporary, for internet-related businesses and new technologies. For example, the metaverse was one such innovation that received a lot of attention a couple of years ago. But things have certainly cooled off around this idea, particularly as riskier investments were written off throughout 2022 amid rising interest rates. 

This year has been a different story, with investor optimism about tech companies front and center once again. Maybe now is a good time to put some capital to work behind unproven, but potentially lucrative, technological shifts. 

If you're looking to invest in a stock that has exposure to the metaverse, then look no further than Meta Platforms (META 0.11%). Here's why. 

Reality Labs 

In 2020, Meta renamed its division focused on augmented reality (AR) and virtual reality (VR) to Reality Labs. Its lineup consists of Meta Quest headsets, Ray-Ban Stories sunglasses, Horizon Worlds, which is a free VR universe for users to explore, and Horizon Workrooms, a place where coworkers can collaborate. Users can engage in different applications related to gaming, social, fitness, entertainment, and productivity. 

Mark Zuckerberg, Meta's founder and CEO, hopes the metaverse will reach 1 billion people in the next decade, becoming the next big computing and internet platform. If this ends up being a success story, it could put Meta in a truly advantageous position in terms of engagement and opportunities for monetization. 

Reality Labs has already burned a huge amount of cash, though. In 2022, the segment posted an operating loss of $13.7 billion on revenue of $2.2 billion. The unit's operating loss totaled $7.7 billion through the first six months of 2023. Given that this is uncharted territory, it's really anyone's guess when or if Reality Labs will become a major driver of positive financial results. 

While many naysayers can point to how much of a waste of money this has already been, it's hard to bet against Zuckerberg. He founded Facebook in 2004, and less than 20 years later, it has become a $760 billion enterprise. This should give shareholders some confidence when it comes to this endeavor. 

Family of Apps 

Beyond Meta, there are several other metaverse businesses one could invest in such as Roblox, Unity Software, and Cloudflare. The drawback with these, in comparison to Meta, is that they don't have another extremely profitable segment to help offset the huge investments and losses needed to develop the metaverse. 

Meta has two segments: the money-losing Reality Labs and one it dubs "Family of Apps," which delivered 99% of the company's revenue in the most recent quarter, and includes Facebook, Instagram, WhatsApp, and Messenger. These are four of the most popular internet properties on the planet, with nearly 3.1 billion daily active users (DAUs) combined. 

What's impressive is that even with this incredible penetration, Family of Apps grew DAUs by 7% in the second quarter on a year-over-year basis. And this segment is extremely profitable, registering $13.1 billion of operating income in Q2. This explains why the company's balance sheet and financial position are so strong, as indicated by $53 billion of cash, cash equivalents, and marketable securities on the books as of June 30, versus $18 billion of long-term debt. 

In other words, Meta has a crown jewel segment that produces copious amounts of free cash flow, one that allows the business to take on long-shot projects like the metaverse. This makes Meta Platforms likely the best metaverse stock because it has the financial flexibility to actually see this massive undertaking through to the end, whatever that looks like, while smaller companies in the space might not be so fortunate. They could run out of resources to dedicate to the metaverse before seeing any meaningful returns. 

Plus, Zuckerberg might be the single executive with the most credibility to invest in a project as ambitious as the metaverse.