Roblox Stock: Is RBLX A Buy Right Now After Q4 Earnings Results?


San Mateo, Calif.-based Roblox (RBLX) is a popular video game platform that is considered a play on the emerging metaverse, a next-generation version of the internet. Is Roblox stock a buy in the current stock market rally?



The Roblox stock initial public offering (IPO) 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 the Roblox IPO raise any capital. Instead, current investors begin selling already existing shares based on demand when trading opens.

On March 10, 2021, Roblox stock closed at 69.50, more than 54% above the 45 IPO price. A huge price percentage increase on the IPO day indicates strong institutional backing.

The company’s eponymous „Roblox“ game is the biggest mobile game of 2020 in the U.S. in terms of revenue, according to Sensor Tower. It surpassed „Candy Crush,“ which had been the top game for the past three years.

Roblox reported having 32.6 million daily active users at the end of 2020, up 85% from the year-ago period. Revenue jumped 82% in the year to $924 million. It had a net loss of $253 million in 2020, vs. a $71 million loss in the prior year, according to the Roblox IPO filing.

What makes Roblox different from other online game platforms is that it lets users create their own games. Developers receive 30% of the proceeds generated from a game, such as the sale of virtual outfits and avatars.

Roblox reported its fourth quarter earnings results after the close on Feb. 15, missing Wall Street’s estimates. The company lost 25 cents a share on bookings of $770.1 million in the December quarter. Analysts had expected Roblox to lose 12 cents a share on bookings of $772 million, according to FactSet. Roblox stock crashed more than 26% in response.

The company’s first-quarter earnings results are due out May 10 after the market close. Analysts expect the company to lose 18 cents per share on sales of $665.9 million. In the year-ago period, Roblox reported a per-share loss of 46 cents on revenue of $652.3 million.

Stock Market ETF Strategy And How To Invest

Roblox Stock Is A Metaverse Investing Play

What is the metaverse? The metaverse is considered a next-generation version of the internet. Technologists describe the metaverse as a persistent, shared, 3D virtual environment. There, people meet for activities ranging from playing games to conducting business. It incorporates such technologies as virtual reality and augmented reality.

Mark Zuckerberg, now the chief executive of Facebook parent Meta Platforms (FB), describes the metaverse as „an embodied internet that you’re inside of rather than just looking at.“

„The metaverse is bigger than gaming,“ said Christina Wootton, Roblox vice president of brand partnerships. „We’re ushering in this new category of human co-experience. It’s an immersive place where people can come and connect with one another and have shared virtual experiences. They can do things together, such as work, learn, play, shop and experience entertainment.“

4 Top Growth Stocks To Watch In The Current Stock Market Rally

Metaverse Stocks To Buy And Watch

Meta Platforms, Microsoft (MSFT) and Nvidia (NVDA) are among the top metaverse stocks to watch in the metaverse space.

Meta Platforms is more than 40% 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 gaming, like possible transformations of „Halo“, „Minecraft“ and „Microsoft Flight Simulator“ into full 3D worlds. The IBD Leaderboard stock is below its long-term 200-day line.

Nvidia is below its 50-day line, as a new base continues to take shape. Shares are about 40% off their 52-week high. On Nov. 9, Chief Executive Jensen Huang touted Nvidia Omniverse, a virtual world simulation and collaboration platform for 3D workflows.

Roblox Stock News

On Sept. 1, Roblox announced the launch of Vans World, an interactive Vans skateboarding world experience. Vans World is a metaverse playground where players can perform tricks and customize Vans gear and apparel, while hanging out with their friends.

On Nov. 18, 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 apparel and check out the company’s latest products.

On Nov. 19, Roblox held a well-received analyst day event in which Roblox executives discussed the company’s penetration of 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 Feb. 9, The National Football League launched NFL Tycoon to engage the next generation of NFL football fans in the Metaverse. The NFL will be the first official major sports league to offer a persistent experience on Roblox. NFL Tycoon lets fans build, play, and learn in their own NFL-centered world through a combination of the popular tycoon and simulator genres on Roblox.

Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live

RBLX Stock Price And Technical Analysis

Roblox stock surged more than 42% on Nov. 9, breaking out past 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 pullback in shares, the stock is trading about 70% off its 52-week high, and is sharply below its key 50-day moving average and long-term 200-day line.

Bullishly, the stock’s relative strength line surged to new highs in the wake of the stock’s breakout move. But that technical indicator has fallen dramatically during the stock’s sharp decline. The RS line measures a stock’s price performance vs. the broad market.

According to the IBD Stock Checkup, RBLX stock has a weak 14 out of a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.

On Wednesday, RBLX shares plunged almost 12%, trading around 37.17. RBLX stock hit an all-time low on March 15 at 36.04.

Is Roblox Stock A Buy Right Now?



Leave A Reply

Your email address will not be published.