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roblox stock analysis

The Actual Future Of The Metaverse

information technology Nov 11, 2021

When we first recommend Roblox in April the stock was trading at $70 but fast forward to today and the stock is up 57% percent.

But just this week Roblox's stock was up over 40% in a single day and quickly came crashing down 11% in trading on the following day (Nov 10, 2021)!

With so much hype around the Metaverse + Roblox as well as so much volatility around the stock, many investors are left wondering, "What the hell is going on!?!?"

In order to truly answer that question and give the outlook on what's next, we need to give some context on what's happened with the company this year. 

Once we provide the results this year, we can jump into what is next for the stock.


Roblox Overview:

So whether you know or don't know about Roblox, we're here to give the quick 30 second version of what they're doing before we jump into the boring stuff (aka the numbers).

Roblox is a video game ecosystem that borrows a lot from the spirit of games like Minecraft and real-world toys like Lego. But instead of being a single unified experience, Roblox is decentralized.

The team at Roblox brilliantly grew a stable of independent developers to make content on top of the Roblox platform — so there’s tens of thousands of hours of things to do on Roblox, and a HUGE number of their players can check out. 

That’s it, that’s the only explanation of the Roblox experience you’re going to get from us. Anything else is beyond our comprehension. And now for the boring stuff!


Roblox Performance This Year:

Roblox posted some serious numbers this last quarter. The biggest takeaways we saw were across their revenue & active users.

The last 12 months of revenue grew over 70% from their 2020 numbers while their active users nearly doubled from last year!

Before we start picking apart these numbers, that growth is not only insane but also appears to be sustainable. With covid tailwinds starting to die down, Roblox delivered stronger numbers than ever - which is very telling for a business that has been propelled forward due to the pandemic.

But when we dive deeper into these numbers we see that the bulk of this growth comes from the younger demographic and this is encouraging as this age group will be inheriting serious wealth over the next several decades from the older generation.

When we look at sources of revenues from companies, we often give more weight towards companies that skew towards the younger demographic as older customers age out and spend less over time.


Roblox Outlook: 

What's even more is that Roblox has some serious upcoming growth opportunities. This is because Roblox is truly one of the first companies to blur the line between gaming and social media. Fortnite has done that to a certain extent but Roblox has really bridged the gap.

If they keep growing their metaverse they truly have the ability to address every single person in the world under the age of 35 with these types of user generated experiences.

While this is impressive in itself, the user generated aspect is the reason the scalability of their platform dwarfs most others. By allowing developers and users to decide the future of the metaverse, they can take a more hands off approach and worry less about actually building and generating the content/storyline.

Their platform therefore is truly built for serious growth and now has real opportunities to leverage new revenue lines going forward (such as e-comm, ads, etc.)

While the valuation is high now, the expectations for Roblox over the next decade are even higher. With the metaverse likely to come, we see Roblox serving a piece of it rather than being the starting and stopping point.

There will be several other companies that will contribute to this! Here is the whole video on this here: Our Meta Vs. Roblox Breakdown

But until then we're likely to continue to experience volatility on the path upwards. With Cathy Wood selling a large portion of her position today, this shows how unstable the stock can be. Therefore this stock is only for the high risk/high reward investor.

If Roblox is able to deliver on the promise of the metaverse with user generated content at its core, we'll be seeing some serious upside for the stock in the years to come!



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Current Price: $95

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Ticker: RBLX

Market Cap: $54.79B

Dividend Yield: N/A