Based in San Mateo, California, Roblox (RBLX) is a popular video game platform that is seen as an entry into the emerging metaverse, a futuristic version of the internet. Is Roblox stock a worthwhile investment in today’s stock market rally?
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Following the market opening on Wednesday, Roblox shares surged by as much as 20% after the company posted Q3 earnings and sales results that exceeded expectations. The company reported a loss of 45 cents per share, beating the 49-cent loss expected by FactSet. Additionally, the company’s bookings were $839 million, surpassing the estimated $824.7 million. Bookings include sales and deferred revenue.
Roblox stock was trading around $41.50 per share on Wednesday, marking an almost 19% increase in morning trade.
RBLX Stock IPO
Roblox stock made its initial public offering (IPO) via direct listing on March 10, 2021, with a suggested price of $45 per share. With a direct listing, no new shares in the company are issued and sold, and the IPO did not raise any capital. However, the stock closed at $69.50 on March 10, 2021, over 54% higher than the IPO price, signaling strong institutional support.
In 2022, the company’s namesake “Roblox” game ranked among the top five highest-grossing mobile games worldwide, as reported by Finbold. The game recorded player spending of $861.86 million in 2022. What sets Roblox apart from other online game platforms is its user-generated games, with developers earning 30% of the proceeds from in-game purchases.
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Roblox Stock Is A Metaverse Investing Play
What is the metaverse? The metaverse is envisioned as a next-generation version of the internet. It is a shared, 3D virtual environment that acts as a meeting place for various activities, from gaming to business. This virtual world incorporates technologies like virtual reality and augmented reality.
According to Mark Zuckerberg, the CEO of Facebook parent company Meta Platforms (META), the metaverse is “an embodied internet that you’re inside of rather than just looking at.”
Roblox’s Vice President of Brand Partnerships, Christina Wootton, sees the metaverse as more than just gaming. She believes it’s a new category of shared human experiences, offering immersive activities ranging from work and learning to shopping and entertainment.
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RBLX Stock Price And Technical Analysis
In late September, Roblox stock hit a low of $24.88. The stock price has been fluctuating, and currently, it is below its long-term 200-day line according to IBD MarketSmith chart analysis. Investors are advised to wait for a new base to form, offering a viable buy point.
The IBD Stock Checkup shows that RBLX stock has a Composite Rating of 40 out of 99, signaling weakness. The Composite Rating provides an overview of a stock’s strengths based on key fundamental and technical metrics.
