Roblox: Struggle Will Persist
- Roblox reported more weak monthly metrics in February, with bookings down up to 4%.
- The gaming company continues to face tough comps in the key US & Canada market.
- The stock is more reasonably priced at ~5x '23 EV/S targets, but the business will struggle into the 2H'23.
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Roblox (NYSE:RBLX) continues to be hit by tough comps due to the Covid pull forward of the prior couple of years. The company released 2022 numbers suggesting key domestic users are still not returning to prior peak spending and usage levels. My investment thesis is now more Neutral on the stock, but the weak metrics will persist for months ahead.
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Update - March 28
Gotta love these bullish analyst calls with a PT barely above the current price and over 50% below the previous high. So much capital destruction occurs when investors are willing to pay any price for future growth. Most end up dumping a stock like $RBLX at the lows.
- Roblox (NYSE:RBLX) and Unity Software (U) held steady in pre-market trading, Monday as Daiwa Capital Markets analyst Jonathan Kees started coverage of both companies with outperform ratings saying they are leaders in providing "entre into the metaverse."
- Kees said he was "cautiously optimistic" about both Roblox (RBLX) and Unity (U), saying he sees "the young metaverse market with a small base growing [by] nearly triple digits" in the coming years. Kees set a price target on Roblox (RBLX) of $56 a share, and also put a price target of $110 a share on Unity's (U) stock.