Roblox (NYSE:RBLX)
On Tuesday, Roblox stock dropped by roughly 5% when financial firm Barclays began covering the video game publisher and announced it is a “fading call option on the metaverse.”
According to the company, Roblox (NYSE:RBLX) was one of the “primary benefactors” of the epidemic, with its user base growing by more than 2.5 times from the first quarter of 2020 to the third. Since then, however, progress has slowed since the company’s main demographic (those aged 5 to 24) is now 30% saturated, “suggesting both user and bookings growth may be challenging heading ahead.”
The analysts added, “On the creator side of the platform, we consider Roblox’s 71% take rate as a hurdle to on-board new experienced developers as compared to the more appealing economics of creating on competing engines like Unity and Unreal.”
While Roblox (RBLX) has a “huge advertising potential” in 2023 thanks to immersive commercials, analysts believe the Roblox stock is “overvalued” at five times anticipated 2024 bookings and 41 times estimated 2024 EBITDA at now.
Despite this worry, Barclays pointed out that Roblox stock has significant long-term potential, including a $5T total addressable market as “the first cross-platform metaverse” and an anticipated $800M advertising opportunity by 2025, which may further enhance margins.
Roblox (NYSE:RBLX) has several things going for it, including the fact that it is not as reliant on hit titles as other video game companies are, the rise of subscriptions, the fact that it does not spend much on user acquisition, and the fact that it has not been affected by iOS and Android’s respective privacy updates.
In a complaint filed earlier this month, a California teenager claimed that Roblox (NYSE:RBLX) facilitated her sexual and financial abuse.
Roblox stock falls as Barclays initiates an underweight position and labels the company a “fading alternative” in the virtual world.
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As Barclays downgrades Roblox to underweight and labels it a “fading choice” in the metaverse, Roblox stock price falls.
Featured Image – Megapixl © Inkdropcreative1
Author Shariq Khan 
