San Mateo, based in California Roblox (RBLX) is a popular video game platform that is considered to be a game on the emerging metaverse, a next generation version of the internet. Is Roblox stock a buy in the current stock market rally?
On Nov. 9, Roblox said it lost 50 cents a share on revenue of $517.7 million, missing its upper and lower estimates. Analysts had expected the company to lose 32 cents a share on sales of $593.4 million, according to consensus estimates. Sales grew 2% over the same period a year ago. Roblox shares plunged 21% in response.
Roblox stock fell nearly 1% on Friday, trading about 31.75 a share.
IPO of RBLX shares
The initial public offering (IPO) of Roblox stock via direct listing occurred on March 10, 2021 with a suggested price of 45 per share. With a direct listing, no new shares in the company are created and sold. Nor did Roblox’s IPO raise any capital. Instead, current investors begin selling existing shares based on demand when trading opens.
On March 10, 2021, Roblox stock closed at 69.50, more than 54% higher than its 45 IPO price. A huge percentage price increase on IPO day indicates strong institutional support.
The company’s “Roblox” game of the same name is the biggest mobile game of 2020 in the United States in terms of revenue, according to Sensor Tower. It surpassed “Candy Crush”, which had been the best game of the past three years.
What makes Roblox different from other online gaming platforms is that it allows users to create their own games. Developers receive 30% of the proceeds a game generates, such as the sale of virtual outfits and avatars.
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Roblox Stock is an investment game in the metaverse
What is the metaverse? The metaverse is considered to be a next generation version of the internet. Technologists describe the metaverse as a shared, persistent 3D virtual environment. There, people meet for activities ranging from gaming to conducting business. It incorporates technologies such as virtual reality and augmented reality.
Mark Zuckerberg, now CEO of parent Facebook Half Platforms (META), describes the metaverse as “an embodied Internet that you are in rather than just looking at”.
“The metaverse is bigger than the game,” said Christina Wootton, Vice President of Brand Partners at Roblox. “We are ushering in this new category of human co-experience. It is an immersive place for people to connect with each other and share virtual experiences. They can do things together, such as work, learn, play, shop and experience entertainment .”
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Metaverse stocks to buy and watch
Metaplatforms, Microsoft (MSFT) e Nvidia (NVDA) are among the best metaverse titles to watch in the metaverse space.
Meta Platforms is nearly 70% off its 52-week high. The company has invested heavily in virtual reality and augmented reality as it builds Zuckerberg’s vision of the metaverse.
Microsoft is planning metaverse apps for games, such as possible transformations of “Halo”, “Minecraft” and “Microsoft Flight Simulator” into full 3D worlds. Dow Jones stock is sharply below its long-term 200-day line.
Nvidia is below its 200 day line. Shares are more than 50% lower than their 52-week high. On November 9, 2021, CEO Jensen Huang advertised Nvidia Omniverse, a virtual world simulation and collaboration platform for 3D workflows.
Roblox stock news
On September 1, 2021 Roblox announced the launch of Vans World, an interactive experience of the world of Vans skateboarding. Vans World is a metaverse playground where players can perform tricks and customize Vans gear and clothing, while hanging out with their friends.
On November 18, 2021, Nike launched an immersive world experience, called Nikeland, on Roblox. Players will be able to enter a digital showroom to dress their avatar in Nike clothing and check out the company’s latest products.
On November 19, 2021 Roblox held a well-received analyst day where Roblox executives discussed the company’s penetration into new markets such as education and music. The company also said it believes all consumer brands will need a Roblox strategy in the next three to five years.
Morgan Stanley analyst Brian Nowak reiterated his overweight rating on Roblox stock and raised his price target to 150 from 88.
On February 9, the National Football League launched NFL Tycoon to engage the next generation of NFL fans in the Metaverse. The NFL will be the first official major sports league to offer a persistent experience on Roblox. NFL Tycoon allows fans to build, play and learn in their own NFL-centric world through a combination of the popular tycoon and simulator genres on Roblox.
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RBLX stock price and technical analysis
In November 2021, Roblox shares soared, clearing a 103.97 buy point in a consolidation, according to IBD MarketSmith chart analysis. The catalyst was the company’s strong earnings. But after a huge drop in the stock, the stock is trading more than 75% off its 52-week high.
On the downside, the stock’s relative strength line is far from its old highs due to the stock’s underperforming price. The RS line measures the performance of the price of a security with respect to the market in general.
According to the IBD Stock Checkup, RBLX stock has a weak 9 out of a perfect 99 IBD Composite Rating. Composite Rating, an easy way to identify the fastest growing stocks, is a combination of fundamental metrics and key techniques to help investors assess a stock’s strengths.
RBLX stock hit an all-time low on May 10 at 9.65pm.