This week, many people are undoubtedly asking questions about Roblox stock (NYSE:RBLX) with its recent rise. Let’s take a look at what drove the stock up, its long-term prospects, and whether it’s still a buy despite its recent surge.
Roblox Stock: Roblox’s User Base Continues to Grow.
Roblox released its September user metrics on Monday, revealing higher-than-expected growth in daily average users (DAUs) and engaged hours.
These metrics are critical for Roblox, which runs an online, metaverse-style gaming network. Because the company earns between $3.67 and $3.79 per active user, its user count indicates its upcoming revenue and earnings early.
Roblox stock (NYSE:RBLX) has long been labeled as a pandemic stock, but its September results call that hypothesis into question. Its user base is steadily growing. Meanwhile, bookings (sales of Roblox’s in-game currency that are not recorded as revenue until a user spends the currency) increased by 11% to 15% year over year in September, despite continuing negative foreign exchange effects from the strong dollar. Without these foreign exchange headwinds, the company estimates that bookings would have increased by 17% to 21%.
Overall, the September user metrics clearly showed that Roblox’s core business is still doing well.
Roblox Stock: Valuation Has Recovered Slightly, But Only Slightly.
So, Roblox’s business appears to be doing well, but is it too late to invest? Let’s look at Roblox stock (NYSE:RBLX) valuation to see if the stock is undervalued.
Roblox was founded in 2004, but it did not go public until March 2021. By October 2021, shares had almost doubled but had subsequently dropped substantially. Despite the latest rebound, Roblox stock (NYSE:RBLX) is still down 59% year to date.
However, 2022 might be a fantastic time to acquire shares at a low cost for long-term Roblox supporters.
Roblox stock (NYSE:RBLX) traded at an average price-to-sales (P/S) ratio of 21.5 throughout its brief time as a public business. Despite this, the stock’s current P/S ratio is merely 11.2. While not inexpensive in absolute terms (the P/S ratio for the whole S&P 500 is just 2.3), Roblox’s P/S ratio is low compared to its historical long-term average.
Is Roblox Stock a Good Investment Right Now?
I’ve long been a Roblox stock (NYSE:RBLX) lover. I believe the company’s small, low-cost version of the metaverse will endure. Roblox’s September stats seem to demonstrate this.
Furthermore, the firm is diversifying its income streams by extending its capacity to sell in-game ad space and collaborating with other companies on virtual and actual items.
For all of these reasons and more, I believe Roblox stock is a long-term investment.
Featured Image- Megapixl @ Rimidolove
Author Okoro Chinedu 
