Is Roblox Stock Expected to Rise?

Since Paris Hilton launched her metaverse business on Roblox, the Roblox Stock is expected to increase rapidly. Paris World on Roblox actually attracts so many investors when they discover how the company’s games will differentiate itself from others. Thanks to an unexpected source, Roblox may also become 2022’s meme favourite.

In addition to Paris Hilton, there are a number of public figures who also buy the Roblox Stock, including Nancy Pelosi. With the involvement of public figures, many people think that the Roblox Stock will rise. So, let’s see what reasons make Roblox Stock’s expected rise through our post below!

Is Roblox Stock Expected to Rise

Is Roblox Stock Expected to Rise?

When Facebook renamed itself to Meta, it actually helped lift gaming platform stocks. Certainly, Roblox Stock will benefit from Meta’s commitment as well. Furthermore, it will expand its reach without Meta’s help.

In fact, a lot of people are spending more time gaming in Roblox. Sure, it will attract many investors to buy Roblox Stock immediately. House Speaker Nancy Pelosi disclosed her positions, in a disclosure the House clerk made public on December 30, 2020. Total bets up to $3 million including $250,000 – $500,000 bets on Roblox.

Expiring on January 20, 2023, Nancy Pelosi bought call options with a strike price of $100. Nancy and her husband own a good track record with investing. Well, the disclosure probably attracts Reddit users on stock discussion subgroups to copy the trade.

Roblox has posted revenue growing by 102% year-on-year to $509.3 million in the third-quarter. The Roblox investors must notice the strong bookings that increased by a solid 28% Y/Y to $637.8 million.

The opportunities are good that the business momentum will continue into the current fourth quarter and the year ahead. For more information, the daily active user base actually rose by 31% Y/Y to 47.3 million.

The higher engagement on the Roblox will generate better monetization rates. In fact, Omicron’s growing spread actually forced the government to introduce some restrictions. Some investors probably expect that the easing lockdowns in the month ahead will not hurt Roblox’s growth.

The user loyalty is so strong that after an outage in Q3, user activity recovered. The investors may forecast even strong site visits this quarter, since it didn’t experience any lasting negative impact on user activity.

The holiday quarter is the strongest seasonally. It has room to run higher if Roblox posts string holiday traffic, even though shares are performing well.

What Are Factors that Influence Roblox Stock?

There are multiple factors that influence Roblox Stock. We have taken a little research where we found multiple factors that influence Roblox Stock, here they are:

    1. Risks

Growing concerns about Roblox being unsafe for children may influence Roblox Stock to rise. In this case, management should assess the risks and proactively enforce the rules to prevent child labour exploitation.

    • Furthermore, RBLX stock valuation trades at unfavourable levels. The stock scores an 11/110 on value:
      Valuation Ratings Score: 11
    • Quality Score: 31

Since investors bet on strong growth ahead, Roblox has weak value scores.

To measure its value score, Stock Rovers uses metrics like price-to-earnings. Some investors can consider Activision (NASDAQ: ATVI) that trades at a P/E in the 20 times range. ATVI stock is under-performing, as it delayed Overwatch 2 and Diablo 4.

Additionally, the players may not see the title release until 2023. Activision Blizzard revealed that once working with new leadership, ‘It has become apparent that some of Blizzard content planned for the following year will benefit from more development time to reach its full potential’.

Electronic Arts (NASDAQ:EA) has hit the game titles such as Battlefield and FIFA. Just like Roblox, EA also posted strong bookings where its net bookings grew by 27% Y/Y to $7.077 billion.

    1. Social Connections

As we know that Roblox focuses on establishing social connections and engagement that may offer more than just games. For instance, the platform actually supports group working or learning. David Baszucki, Roblox Chief Executive Officer stated that Roblox is a platform to invite people to connect with their friends.

In this case, the creators and developers will also continue developing its virtual economy. Sure, Roblox will realize an engagement-based payout where the richer its developer, the community will get. He also cited that some developers earn $10 millions on Roblox.

This level of reward actually attracts more developers to join Roblox. More users will join and they will be also spending more time and money on the platform. Some investors probably ignore the weak value score that bet that the growth rate won’t slow any time soon.

    • Fair value and your takeaway

According to Topranks, the average price target is approximately $117.00, of the 11 analysts covering Roblox. The investors who are wary of the stock valuation probably place more weight on opinions that are offered by bearish analysts. The investors have a price target as low as $70,00.

Unity (NYSE:U), a 3D game engine recently pulled back. The markets are less willing to pay any price for game developer stocks. Before buying Roblox Stock, you may need to wait for the bearish sentiment to turn neutral.

Roblox users probably get bored playing the games on the Roblox platform. Well, they probably take a break. Certainly, the quarterly results will not indicate this trend yet. However, Roblox’s overall growth will continue if it happens but new users replace them.

Okay, those are some factors that influence Roblox Stock to rise and low.

It’s important to note, the current gaming craze is not guaranteed to last forever, even though Roblox is currently riding high on a wave of new users. Well, the Roblox stock release date was just the beginning of an investment journey which you can undertake at any time.

If you decide to invest in Roblox, you need to take a long-term approach to evaluate the company. A lot of stocks decline in value once their initial offerings. So, you probably want to wait until the price has depreciated, so that you’re not overpaying.