Roblox's (RBLX) December Metrics Indicate Promising Growth
Roblox RBLX reported its key metrics for December, which showed growth in the company. Daily active users were 61.5 million, up 18% year over year, while estimated bookings were between $430 million and $439 million, up 17-20% in the same time frame.
After a disappointing November that witnessed slow growth and declining daily active users, these better-than-expected results for December instilled excitement among investors, as the company's shares climbed 12% on Jan 17, which is the most in three months.
However, estimated revenues for the month were between $189 million and $199 million, indicating a year-over-year decline of 1-6%. This is due to the US Dollar strengthening against other currencies, which is a significant market for Roblox. Per Backlinko, only 28% of the users of Roblox were from the United States and Canada in 2021, whereas the rest were mostly from Europe and the Asia-Pacific regions.
The headwind caused shares of Roblox to decline 51.3% year over year compared with the Zacks Consumer Discretionary sector's fall of 24.2%.
Entry Into the Metaverse to Further Boost Roblox’s Growth?
Per PwC’s Global Entertainment and Media Outlook 2022-2026, the global gaming industry is expected to be worth $321 billion by 2026. This makes the future of the gaming industry bright and provides an opportunity for Roblox to exploit it and emerge as a major player in the market.
On the heels of it, Roblox has been seen making huge efforts and investments to enter Meta Platform’s META metaverse. It is the first entrant among gaming companies into the metaverse ecosystem and this could level up its gaming platform.
Roblox is entering into partnerships with famous luxury brands such as Gucci, Ralph Lauren, Givenchy, Tommy Hilfiger and Nike to provide its users with a wide range of outfits for their avatars. This helps users to purchase from their favorite brands through Roblox’s in-house currency, Robux. Robux constitutes a major portion of Roblox’s revenues, thus, increased sales of Robux will help the company to boost its top line.
Roblox Corporation Price and Consensus
Roblox Corporation price-consensus-chart | Roblox Corporation Quote
In addition to this, it collaborated with Parsons School of Design in November 2022, which will enable students to work with experienced designers from Parsons and Roblox to create new items. From spring 2023, the physical designs will be put for sale at Parsons, while their digital counterparts will be available at the Roblox avatar marketplace.
The Parsons School of Design is one of the top private universities in New York whose alumni list includes the world-famous designer Marc Jacobs. Hence it is expected that the university would launch an innovative and exciting slate of work that help Roblox, the Zacks Rank #3 (Hold) company, to attract more users, especially the youth, to its platform.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Roblox to Face Competition in Metaverse
Though Roblox is taking initiatives to make a dent in the metaverse, other tech giants such as Microsoft Corporation MSFT and Apple AAPL are establishing their foothold in it as well. Microsoft is focusing on the enterprise metaverse to recreate office space and factory floors in the virtual world. If successfully accomplished, it could bring the metaverse into Xbox.
Per Decrypt, Apple too is about to enter the metaverse soon with a pricey headset that is expected to bridge the gap between virtual environments and digitally enhance real-world use.
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