San Mateo, California roblox (RBLX) is a popular video game platform that is considered a game on the emerging metaverse, a next-generation version of the Internet. Is Roblox stock a buy in the current stock market rally?
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On Wednesday, Roblox shares crashed as much as 23% after the video game company reported earnings that fell below analyst expectations. Roblox lost 46 cents per share on bookings of $781 million.
For the quarter ended June, Roblox recorded $781 million in net bookings and $38 million in adjusted earnings before interest, taxes, depreciation and amortization. Analysts polled by FactSet had expected $785 million and $46 million, respectively.
IPO of RBLX shares
Roblox’s initial public offering (IPO) via direct listing took place on March 10, 2021 with an MSRP of 45 per share. With a direct listing, no new shares are created and sold in the company. Nor has the Roblox IPO raised any capital. Instead, current investors begin selling pre-existing shares based on demand when trading opens.
On March 10, 2021, Roblox stock closed at 69.50, more than 54% above its 45 IPO price. A huge percentage price increase on IPO day indicates strong institutional support.
The company’s eponymous “Roblox” game was among the top five largest mobile games of 2022 in the world by revenue, according to Finbold. The Roblox mobile game showed players to spend $861.86 million in 2022.
What sets Roblox apart from other online gaming platforms is that it allows users to create their own games. Developers receive 30% of a game’s revenue, such as sales of virtual outfits and avatars.
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Roblox stock is a metaverse investment game
What is the Metaverse? The metaverse is considered one next generation internet. Technologists describe the metaverse as a persistent, shared, virtual 3D environment. There people meet for activities ranging from playing games to doing business. It includes technologies such as virtual reality and augmented reality.
Mark Zuckerberg, the CEO of parent company Facebook meta Platforms (META), describes the metaverse as “an embodied internet that you sit in rather than just watch.”
“The metaverse is bigger than gaming,” said Christina Wootton, vice president of brand partnerships at Roblox. “We are ushering in this new category of human co-experience. It is an immersive place where people can come and connect with each other and share virtual experiences. They can do things together, such as work, learn, play, shop and experience entertainment.”
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RBLX stock price and technical analysis
In May 2022, Roblox stock bottomed out at 21.65. Amid a volatile share price rally, the shares formed a handle cup with a buy point of 46.25, according to the IBD MarketSmith chart analysis.
But during Wednesday’s collapse, that buy point is no longer valid, so investors will have to wait for an entry.
According to the IBD Stock Checkup, RBLX stock has a weak 32 out of a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify the best growth stocks — is a mix of key fundamental and technical metrics to help investors gauge a stock’s strengths.
