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Venture Into the Metaverse with a Stake in Roblox

There’s no denying it: online entertainment platform Roblox (NYSE:RBLX) hasn’t dazzled its investors this year, so far. Unfortunately, RBLX stock is down from its peak price from June.

A child playing Roblox on a smartphone.
Source: Katya Rekina/ Shutterstock.com

But then, maybe it’s just a chance to add to one’s position, or start a new one. Before doing that, though, it’s important to understand Roblox’s business model.

Part of that model resides in something called the metaverse. It’s a fairly new concept to some financial traders, no doubt, so an explanation is in order.

There’s also a collaboration with a very famous technology company afoot, which prospective Roblox investors will definitely want to know about. First things first, though – let’s see how the stock’s been doing lately.

A Closer Look at RBLX Stock

Let’s rewind the clock a little bit, shall we? RBLX stock debuted on March 10 of this year. And here’s an interesting trivia tidbit: this event marked the very first direct listing of 2021.

The shares started trading at $64.50. For a while, the buyers were in complete control as the stock price hit a 52-week high of $103.87 on June 2.

I’ve said it many times before, and it bears repeating. The truth is, chasing after parabolic price moves isn’t always great for one’s financial health.

RBLX stock provides a textbook example of this, as it has tumbled since it topped out in early June.

As of mid-August, the share price seemed to be settling near the $84 level.

Without a doubt, $100 will be psychologically significant in the coming months as the tug-of-war between the buyers and sellers continues.

A Whole New World

If you’re serious about investing in RBLX stock, you’ll certainly want to have at least a superficial understanding of the metaverse.

It’s fair to say that Roblox has been a pioneer in developing the concept as well as the implementation of the metaverse. But, what is it, anyhow?

Imagine a fully virtual world in which millions or even billions of participants can gather to take part in meetings and/or collaborative work. Plus, as you might expect, they can engage in various multi-player games.

This is an intriguing idea, and naturally, Roblox is seeking to monetize it.

Metaverses can have their own native token economies. In Roblox’s metaverse, the virtual economy is fueled by a native currency called Robux.

The company’s prospectus provides a fuller picture of how can benefit multiple participants:

“Users who choose to purchase Robux can spend the currency on experiences and on items for their avatar. Developers and creators earn Robux by building engaging experiences and compelling items that users want to purchase. Roblox enables developers and creators to convert Robux back into real-world currency.”

Tapping into Musical Talent

In order to entice more participants into Roblox’s metaverse, the company is looking to get influential music artists involved.

That’s a savvy strategy, since the Roblox metaverse appeals to young people who might be moved to join the platform if they see that their favorite musicians are already there.

Roblox has already facilitated successful collaborations during the past year, including the Lil Nas X Virtual Concert and the Zara Larsson Launch Party.

And now, Roblox has announced a strategic partnership with Sony (NYSE:SONY) segment Sony Music Entertainment. This collaboration could potentially bring many more recording artists into the Roblox metaverse.

Under the agreement, Roblox and Sony Music will “work together to develop innovative music experiences for the Roblox community.”

It’s a major coup for Roblox as Sony Music has a vast global presence in the recording industry.

With that, we should look forward to seeing an array of new musical talent in the Roblox metaverse – and this, hopefully, will translate to enhanced profits for the company.

The Bottom Line

Will copycat companies soon come along with their own metaverses? Probably, yes.

That’s perfectly fine, as it won’t take away Roblox’s status as an innovator.

Besides, with a powerful partner like Sony Music on its side, Roblox should easily retain its leadership position – in the metaverse, yes, but in the real world too.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2021/08/venture-into-the-metaverse-with-a-stake-in-rblx-stock/.

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