Roblox, The 'Only True Metaverse Today,' Has This Analyst Bearish - Here's Why

Barclays analyst Mario Lu initiated coverage of video game developer Roblox Corp. RBLX with an Underweight rating and a price target of $20.

The Thesis: Users joined the Roblox platform to socialize with friends digitally. The San Mateo, California-based company was among the main beneficiaries of the Covid-19 pandemic, with a core demographic comprised of users between 5 and 24 years of age.

It's “what we consider as the only true metaverse today despite looming threats from Meta's Horizon Worlds and Manticore Games' Core,” Lu wrote.

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Roblox users in regions with high-ARPUs (average revenue per user), such as the U.S. and Europe, are “already 30% penetrated.” That means “both user and bookings growth may be challenged moving forward,” which could result in “further potential downward revisions,” the analyst stated.

“While RBLX does have a large advertising opportunity ahead starting in 2023 with immersive ads, we view the stock as overvalued,” trading at a valuation that is “more than two turns above the revenue multiples of its social media peers,” Lu added.

RBLX Price Action: Shares of Roblox had declined by 3.67% to $34.08 at the time of publication Tuesday.

See Also: What 11 Analysts Have To Say About Roblox

Image: Roblox.com