Roblox receives bullish outlook as analysts laud evolution into immersive gaming and Metaverse potential
From its evolution into immersive gaming and social interactions to its potential in the emerging metaverse, Roblox is capturing attention.
Roblox, the popular online gaming company, has received a bullish outlook from Canaccord analysts, who initiated coverage with a Buy rating and a price target of $48.
The stock, which has already seen a 37% surge this year, has been praised for its evolution from a platform for young kids to a leading destination for immersive gaming and social interactions in virtual worlds.
Canaccord analysts mentioned the developer’s efforts to enhance the user experience by generating more realistic avatars and communication features.
“Roblox began as a gaming hub for young kids featuring blocky avatars and simplistic games built by hobbyists, but over time the platform has evolved to become one of the leading destinations for immersive gaming and social interactions in persistent virtual worlds,” the analyst stated.
Despite its impressive growth and user base expansion, the company’s stock has faced volatility since its initial public offering in 2021. The valuation of the company has been a challenge for investors. But, the analysts believe that Roblox's margins will improve in the near term, driven by strong booking growth that is expected to surpass investment increases throughout 2023 and into 2024.
Canaccord sees significant opportunities for Roblox in the coming metaverse, an emerging frontier that holds potential for mainstream adoption and monetization. The analysts highlight the success of the gaming and socialization aspects within the metaverse, which align with Roblox's core offerings. They also draw parallels to YouTube, emphasizing the platform's ability to empower creators to monetize their work in various ways.
“Creators can monetize their work in a variety of ways.”
The global gaming market has witnessed remarkable progress in recent years, further boosting the potential for Roblox's future growth. Canaccord analysts recognize the metaverse as uncharted territory and suggest that Roblox has a long-term opportunity to enter new verticals as technological advancements continue.
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The positive sentiment towards Roblox extends beyond Canaccord analysts. Last month, the company received two analyst upgrades following its mixed earnings report for the first quarter.
According to FactSet, 52% of analysts surveyed in June rate Roblox shares as Buy, while 24% rate them as Neutral and 24% as Sell.
Investors are closely watching Roblox as it navigates the evolving landscape of gaming and virtual interactions.
