- Roblox (RBLX) stock came down to an affordable price for patient buyers recently.
- The catalysts provided by the Covid-19 pandemic in 2020 are no longer present, but Roblox is still in growth mode.
- Investors should take advantage of the opportunity to buy Roblox shares on the cheap.
Some folks who own shares of Roblox (NYSE:RBLX) consider this investment as a way to capitalize on the build-out of the metaverse. Other traders simply own RBLX stock because they’re impressed with the company’s games, which allow the users to socialize in a vast, 3D, virtual world.
Investing in innovative, cutting-edge technologies isn’t always easy. Roblox’s shareholders have been on a roller-coaster ride, and lately that roller coaster has been heading north.
This isn’t the time to cut and run, however. Indeed, one prominent Wall Street expert is bracing for higher share prices — and he’s got the stats to back up his bullish stance.
| Ticker | Company | Current Price |
| RBLX | Roblox | $51.03 |
What’s Happening With RBLX Stock?
RBLX stock debuted on March 10, 2021, through a direct listing. The stock started trading at $64.50, and then shot up to a 52-week high of $141.60 in November.
Unfortunately, it was “elevator down” after that. The stock sank in the early months of 2020, and recently hit the $50 mark.
When a stock falls below its debut price, that’s typically not a good sign. However, the downturn in RBLX stock doesn’t necessarily mean that Roblox is in trouble as a business.
On a trailing 12-month basis, Roblox has lost 97 cents of earnings-per-share (EPS). That’s not deeply negative at all for a $50-ish stock, and it’s conceivable that Roblox could be EPS-positive in the coming quarters.
Most likely, RBLX stock just went up too soon, too quickly after its debut. Besides, it’s not Roblox’s fault that there was a broad-market “tech wreck” in late 2021 and early 2022.
More Users, More Developers
At the very least, we can say that Deutsche Bank analyst Benjamin Black isn’t deterred by the drawdown in the Roblox share price.
His firm initiated coverage on Roblox with a “buy” rating and a $60 price target. Given what Black had to say about Roblox, however, $60 actually seems like a conservative estimate.
Black was effusive with praise for Roblox, calling it an “early leader in the interactive digital creator marketplace, with growing moats and strong network effects.”
Sure, the catalysts for video-game companies brought on by Covid-19 in 2020 aren’t necessarily present in 2022. Nevertheless, Black served up some stats to show that Roblox is still in growth mode.
For one thing, Black cited Roblox’s roughly 50 million daily active users (DAUs). That figure indicates a 56% compound annual growth rate (CAGR) over the last three years. Indeed, for February, Roblox announced that its DAU count was 55.1 million, up 28% year-over-year.
Along with the company’s impressive active-user growth, Black noted Roblox’s “large supply base” of developers as a key competitive advantage.
“Over the last 3 years, Roblox has more than doubled its developer community, with almost 10mn on the platform today,” Black pointed out.
What You Can Do Now
If you’re prepared to take on the risks inherent to emerging technologies, then an investment in Roblox is worthwhile.
The share price appears to have come from its hype-fueled peak. Furthermore, Black’s cited statistics indicate that Roblox has an increasingly popular platform.
Therefore, today is a great day to start a moderately sized position in RBLX stock for the long term.
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.
