As Apple (NASDAQ:AAPL) and Meta Platforms (NASDAQ:META) battle their way into the Metaverse, it’s easy to forget about Roblox (NASDAQ:RBLX), a metaverse play that’s already proven how lucrative the market can be, especially for young audiences. Indeed, the Metaverse is more about gaming or work. Roblox’s platform has shown us just how profound digital “experiences” can be and how a metaverse-like universe can connect us in ways we never thought possible.
As the Metaverse term looks to make its way to the top of headlines (again) in 2024, Roblox will be a stock to watch as it looks to climb out of the ditch it fell into back in late 2021 and early 2022. At this juncture, Wall Street is just mildly optimistic about the firm’s prospects over the year ahead. Personally, I think Wall Street is a tad too cautious on Roblox stock, given the potential for the Metaverse to make a significant comeback in the new year as Apple looks to test the market with its Vision Pro headset.
It’s not hard to imagine many folks underestimating metaverse plays like Roblox this year. As the company looks to add to its ecosystem in 2024, I can’t help but stay bullish on the stock.
Roblox’s Recent Momentum Can Continue, as Metaverse Hype Can Grow Again
Indeed, generative artificial intelligence (AI) has been the hottest of the hot tech trends over the past year, and while it seems tough to top, I think the Metaverse could re-emerge as a theme that attracts some of the investors who believe gen AI has gotten a tad too ahead of itself.
Apple’s massive user base will begin to explore an all-new medium (augmented and virtual reality), which could prove the successor of personal computers. Whether Roblox will be quick to launch a Vision Pro app remains to be seen, as many firms seem to be holding out in these initial stages. Regardless, I’d not discount the power of Roblox as the Metaverse investment theme looks to heat up again.
Just last week, Roth MKM reiterated its Buy rating on shares of RBLX (with a $50.00 price target, implying 23.7% upside), citing their belief that the year could be “bright” for the firm. Roth analysts Eric Handler and Rohit Kulkarni both like the stock and its “very attractive setup” that could beef up bookings growth from here.
I’m in agreement. Handler and Kulkarni really do understand Roblox’s growth narrative. With many growth and monetization levers to pull, it’s likely a mistake to think Roblox stock is destined for another year of consolidation.
Roblox stock has been on a nice run since bottoming out in autumn, with shares now up around 60% from their 52-week lows of approximately $25 per share. Even with the recent 13% correction off 52-week highs, Roblox still looks incredibly intriguing if you’re in the belief that the Metaverse trend could return to the spotlight again while the company does its best to get its wheels fully back on the growth track.
Roblox Has a Wide Moat, but There are Competitors Out There
Roblox’s ecosystem is impressive and acts as a flywheel for growth as more users create content to win over the engagement of fellow players. With many different worlds and experiences available to players, the possibilities of digital places to hang out with friends are virtually endless. Roblox isn’t the only video game firm to implement such a model, though.
Fortnite is an incredibly popular Battle Royale game that’s become quite Roblox-like with recent updates. With a wide selection of user-generated worlds and games, Fortnite stands out as a potential threat that could take a big chunk of Roblox’s lunch, especially from older gaming audiences.
Fortunately, Roblox is doing its best to stay relevant with its users, even as they grow up. Though industry dynamics are sure to shift with every new industry combatant, I’d not be so quick to count Roblox out of the game.
In a prior piece, I highlighted the importance of maintaining attraction with users as they age. Thus far, Roblox has done a reasonable job, but whether it can outcompete ever-strengthening rivals for engagement remains to be seen.
Is RBLX Stock a Buy, According to Analysts?
On TipRanks, RBLX stock comes in as a Moderate Buy. Out of 22 analyst ratings, there are 15 Buys, four Hold recommendations, and three Sell recommendations. The average RBLX stock price target is $44.74, implying upside potential of 10.7%. Analyst price targets range from a low of $21.00 per share to a high of $55.00 per share.
The Bottom Line on Roblox Stock
There’s a lot to love about Roblox stock as the Metaverse looks to reappear in the limelight this year. Though Roblox has numerous levers it can pull to gain traction in 2024, investors must also keep tabs on rivals as more companies recognize the economic profits to be had in the realm of the Metaverse and its like.