Roblox, The 'Only True Metaverse Today,' Has This Analyst Bearish - Here's Why

Zinger Key Points
  • Both user and bookings growth may be challenged moving forward, a Barclays analyst notes.
  • Roblox faces 'looming threats' from Meta's Horizon Worlds and Manticore Games' Core.

Barclays analyst Mario Lu initiated coverage of video game developer Roblox Corp. RBLX with an Underweight rating and a price target of $20.

The Thesis: Users joined the Roblox platform to socialize with friends digitally. The San Mateo, California-based company was among the main beneficiaries of the Covid-19 pandemic, with a core demographic comprised of users between 5 and 24 years of age.

It's “what we consider as the only true metaverse today despite looming threats from Meta's Horizon Worlds and Manticore Games' Core,” Lu wrote.

Check Out Other Analyst Stock Ratings.

Roblox users in regions with high-ARPUs (average revenue per user), such as the U.S. and Europe, are “already 30% penetrated.” That means “both user and bookings growth may be challenged moving forward,” which could result in “further potential downward revisions,” the analyst stated.

“While RBLX does have a large advertising opportunity ahead starting in 2023 with immersive ads, we view the stock as overvalued,” trading at a valuation that is “more than two turns above the revenue multiples of its social media peers,” Lu added.

RBLX Price Action: Shares of Roblox had declined by 3.67% to $34.08 at the time of publication Tuesday.

See Also: What 11 Analysts Have To Say About Roblox


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Posted In: Analyst ColorEntertainmentInitiationAnalyst RatingsTechGeneralBarclaysMario Lu
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