Roblox is an online gaming platform where users can create different worlds and perform different activities in each of them. It is common among people who enjoy this game to purchase ‘Robux’, the currency within this virtual world, through microtransactions. This took it to be one of the top five highest-grossing games in the world in 2022, reaching $861.86 million in player spending.
Despite being among the most successful games of last year, Roblox shares suffered losses last week after the company revealed daily active user (DAU) metrics for March. The company announced that DAUs were up by 26% year-over-year; however, investors seemed to dislike the fact that DAUs took a dip of more than 1 million from last month.
The current overall economic outlook is not much help for Roblox’s development as the company gradually declines, but the long-term picture is likely to be completely different with its new developments in the Metaverse and AI.
Roblox in the Metaverse
Roblox plans innovation in the metaverse and seems to be well-positioned for a returning boom.
It should be stressed that although the metaverse is associated with Meta Platforms, Mark Zuckerberg’s company does not have a monopoly on virtual worlds. Weeks ago Meta confirmed that it would redirect the focus of its company and instead of paying so much attention to the metaverse, it will focus on its core platforms.
This generated uncertainty and it is unknown when the virtual world that Meta envisions will be able to take off. This was one of the main reasons for investors’ interest in the metaverse to fade away slowly; however, in case of virtual worlds coming back strong, being one of the first companies in this branch, Roblox would welcome this news with open arms.
Overnight, the metaverse could once again become the temptation of the tech market. There has to be attention especially after Apple launches its mixed-reality headset.
Should the metaverse take off again, Roblox would be the company that stands to benefit the most from network effects since it constantly tries to offer its audience new and interesting content and innovations. Despite its stock price falling lately, the Roblox in-game ecosystem is well-positioned and has been thriving for years.
“The metaverse is more than just a game,” said Christina Wootton, Vice President of Brand Partnerships at Roblox. “We are inaugurating a new category of human co-experience. It’s an immersive place where people can come, connect with each other, and share virtual experiences. They can do things together, like work, learn, play, shop, and experience entertainment,” she noted.
New AI in Roblox
What initially revolutionized the technological world as groundbreaking news, now seems to have lost steam. The metaverse is no longer viewed with the same awe as before because there will always be new technology that sets the trend.
Today, Artificial Intelligence, by OpenIA and ChatGPT, is what is hot in the market. That’s why Roblox is getting into this technology and looking to capitalize on generative AI. One of the company’s main goals is to “enable every user to be a creator,” to which generative AI will bring a lot of power.
Roblox has two tools, Code Assist and Material Generator, which are in the testing phase. As these advance and evolve, Roblox will be able to lower the technical barriers that prevent a large number of users from building new worlds and elevate the company more quickly.
Is Roblox stock a buy?
Despite the 12% drop in its stock following the March metrics announcement, Roblox could be reborn in the future. The long-term growth offered by the company, the early presence in the metaverse, and its foray into interactive AI technology, make the company one of the most innovative in this sector.
According to Wall Street specialists, Roblox shares have a “Moderate Buy” rating. Its average price target is $44.93, which implies a potential upside of 10.4%, although analysts’ price targets range from a low of $21.00 per share to a high of $55.00.
Several specialists assure that the best time to invest in these game-changing technology trends is when interest has been waning. With that in mind, what do you think of Roblox’s situation? Do you think the metaverse will pick up steam again?
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(Information in this post is for general informational purposes only. It cannot and should not be considered as suggestions or recommendations regarding investing or financial decisions.)
