Roblox Stock Rockets After Game Firm Reports Strong Third Quarter

Video game platform Roblox (RBLX) saw its shares skyrocket on Tuesday after the company beat Wall Street’s targets for the third quarter and showed strong user engagement. Roblox stock soared nearly 40% on the news.




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The San Mateo, Calif.-based company late Monday reported bookings of $637.8 million in the September quarter, up 28% year over year. Analysts expected bookings of $636.5 million, according to FactSet.

Average daily active users increased 31% from a year earlier to 47.3 million in the third quarter. That showed an acceleration in growth from the second quarter when users rose 29% to 43.2 million.

Time spent on the platform rose 28% year over year to 11.2 billion hours in the September quarter. In the second quarter, engaged hours grew 13% to 9.7 billion.

Roblox Stock Soars

In afternoon trading on the stock market today, Roblox stock jumped 39.5% to 107.43. During the regular session Monday, Roblox stock slipped 1.3% to 77.

“Engagement is our north star,” Chief Executive David Baszucki said in a news release. “We’re very pleased that during the third quarter, people of all ages from across the globe chose to spend over 11 billion hours on Roblox.”

Chief Financial Officer Michael Guthrie added, “Growth in all of our core metrics — DAUs (daily active users), hours, and bookings — displayed strong year-over-year growth despite lapping Covid-impacted periods and back-to-school seasonality.”

Roblox lost 13 cents a share on revenue of $509.3 million in the third quarter. In the year-earlier period, it lost 26 cents a share on revenue of $251.9 million.

Roblox Stock Is A Metaverse Investing Play

Roblox stock is considered a play on the emerging metaverse, a next-generation version of the internet. Technologists describe the metaverse as a persistent, shared, 3D virtual environment for socializing, entertainment, and conducting business.

Some analysts think video game platforms will lead in metaverse.

“Despite the hype around ‘metaverse,’ the only companies that can succeed in the metaverse are gaming companies,” Activate Consulting Chief Executive Michael Wolf said in a recent report. “The only viable path to the metaverse is through gaming platforms. Anyone betting on a metaverse platform other than gaming is betting on the wrong horse.”

Take-Two Is ‘Largest Metaverse Company’

Strauss Zelnick, chief executive of video game publisher Take-Two Interactive Software (TTWO), told Investor’s Business Daily that his company could be considered a metaverse company with the virtual worlds it has created with games like “Grand Theft Auto Online.”

“Depending on how you define the metaverse, we’re not only already playing in it, but we’re leading in it,” Zelnick said. “I would argue from a revenue and earnings point of view, we are the largest metaverse company.”

Meanwhile, software giant Microsoft (MSFT) reportedly is planning metaverse apps for gaming. That could include versions of games like “Minecraft,” “Halo” and “Microsoft Flight Simulator.”

To date, Microsoft has mostly focused mostly on metaverse applications for corporate users. At the company’s Ignite 2021 online event on Nov. 2, Microsoft showed off its latest innovations for the enterprise metaverse. They include Dynamics 365 Connected Spaces and Mesh for Microsoft Teams.

Metaverse Exchange Traded Funds

At least two exchange-traded funds have popped up to invest in metaverse companies.

The top holdings for the Roundhill Ball Metaverse ETF (META) are Nvidia (NVDA), Microsoft, Roblox stock and Meta Platforms (FB), the company formerly known as Facebook.

The top holdings for the Fount Metaverse ETF (MTVR) are Apple (AAPL), Meta and Alphabet (GOOGL).

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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