S&P 500   4,701.21
DOW   35,754.75
QQQ   399.61
S&P 500   4,701.21
DOW   35,754.75
QQQ   399.61
S&P 500   4,701.21
DOW   35,754.75
QQQ   399.61
S&P 500   4,701.21
DOW   35,754.75
QQQ   399.61

Roblox Rules The Metaverse, For Now At Least 

Tuesday, November 9, 2021 | Thomas Hughes
Roblox Rules The Metaverse, For Now At Least 

Roblox Rockets Higher On Users And Engagement 

Roblox’s (NYSE: RBLX) Q3 results prove that it rules the metaverse, at least for now. Up and comer Meta, formerly Facebook (NASDAQ: FB) will surely give the company a run for its money but that’s still to come. Until then, the only real choice for business and industry is Roblox and it is gaining traction. What, exactly, is the metaverse? The metaverse is an interactive virtual world best described as a fully-functional video game that mimics life. 

Imagine, if you will, a game that anyone can log on to and when they log on, they can interact with others in the game. Now imagine walking down the street of that game and encountering, not zombies or SEAL TEAM SIX, but businesses like Williams Sonoma (NYSE: WSM), Domino’s Pizza (NYSE: DPZ), or CVS (NYSE: CVS), businesses that your avatar can walk into and shop. Purchases made in this metaverse are made in real-time via eCommerce with real money and quickly delivered to your door. Perhaps one of those businesses is a venue and you go in to see a concert, or a play, or an HQ to hold a board meeting with your counterparts. That is what the metaverse is and Roblox is making it work. 

Roblox Mixed Quarter Good News For The Market 

Roblox had a mixed quarter to be sure but the key takeaways are users growth, engagement, and conversions which all point to continued double-digit growth. The company reported $509.3 million in net revenue or up 102.2% from last year. That’s awesome news except for the fact it missed the consensus figures by 2000 basis points but there are mitigating factors. Bookings, an indicator of future revenue, is up 28% over last year and beat the consensus while DAU’s and hours per user are both on the rise. DAU’s are up 31% and compounded by a 28% increase in hours per user despite the back-to-school season. We take this to mean strong carryover in the youth group as well as continued growth into the upper age groups and non-game/metaverse aspect of the business. 

Moving down to the earnings, earnings remain strong but a GAAP loss was reported. The good news is that the GAAP -$0.13 in EPS beat the consensus by a penny including significant increases in R&D and advertising spending. The increase in R&D alone, +167% to $138 million, is more than enough to offset the loss and produce a profit. In terms of cash and the balance sheet, free cash flow increased by 7% and capitalization is strong. The company is net cash with $1.9 billion in cash and equivalents on the book and only about $0.200 billion in debt. 

The Analysts Are Mum

Typically, the analysts are pretty vocal in the wake of results like this but so far, the analysts have been mum. That said, price action jumped more than 25% in the wake of the release to trade exactly in-line with the Marketbeat.com analysts consensus estimate. The estimate, notable, has not budged in over three months so the stock is overdue for some analyst’s chatter. The current consensus sentiment is a weak Buy but we think that will change. Roblox is going to face tough competition in the metaverse but it has two things going for it. The first is the first-mover advantage it has a big head start. The second is inter-operability. It is our view the metaverse will become ubiquitous like the Internet and that will breed the need for interoperability. It’s a big metaverse, there will surely be more than one winner in the group. 

The Technical Outlook: Roblox Melts Up 

Shares of Roblox are up more than 25% in the wake of the earnings release and will likely move higher. The questions are how strong will resistance be at the $100 to $103.50 zone and how deep/soon will the pullback be before prices really start to move higher. With prices up as they are we expect profit-taking and consolidation at this level with the potential for a double-digit pullback in prices. For now, the $95 and $90 look like the best targets for strong support. Until we see what the market does, enjoy your profits if you have them and wait for a pullback to buy if you don’t. 

Roblox Rules The Metaverse, For Now At Least 

Should you invest $1,000 in Roblox right now?

Before you consider Roblox, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Roblox wasn't on the list.

While Roblox currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The 5 Stocks Here

 


Resources

Premium Research Tools

MarketBeat All Access subscribers can access stock screeners, the Idea Engine, data export tools, research reports, and other premium tools.

Discover All Access

Market Data and Calendars

Looking for new stock ideas? Want to see which stocks are moving? View our full suite of financial calendars and market data tables, all for free.

View Market Data

Investing Education and Resources

Receive a free world-class investing education from MarketBeat. Learn about financial terms, types of investments, trading strategies and more.

Financial Terms
Details Here
MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research.