At Its All Time Lows, Now Is a Good Time to Buy Roblox Stock

RBLX stock - At Its All Time Lows, Now Is a Good Time to Buy Roblox Stock

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Investors may blame Roblox (NYSE:RBLX) stock for continuing its decline on Nasdaq’s year-to-date downtrend as tech stocks — even those on other exchanges — underperform. The mobile gaming platform, which started trading publicly on March 10, 2021, timed its listing perfectly. Rookie investors who forgot that initial public offerings and direct listings favor company owners are losing a bundle.

Unless it reports accelerated growth, RBLX stock risks underperforming the markets for a while longer. Shareholders will need more patience betting on Roblox’s strong prospects. The company is a great buy as young gamers spend more time on the platform. But even after falling from the $141.60 high set in November 2021, the stock could get cheaper.

The market will remain irrational longer than some will expect. Stockholders will need to wait out the storm and keep their long position in Roblox. The bearish bet against Roblox is immaterial. The short float is a bit under 6%. This suggests that the market believes Roblox is strategically positioned in the gaming world, particularly in the metaverse.

Meta Platforms (NASDAQ:FB) jump-started a massive rally when it announced a pivot into the metaverse. Speculators overpaid for RBLX in the last year, betting that Roblox’s platform would evolve, too. In reality, other gaming firms offer a higher level of entertainment.

For example, Electronic Arts (NASDAQ:EA) has many sports games its customers want. Unity Software (NYSE:U) is developing Unreal Engine 5, the latest version of its game engine. Gamers get immersive movie-level graphics quality. Conversely, Roblox’s graphics are simplistic. As competitors invest heavily in a better platform, Roblox risks falling behind.

Fortunately, the company’s Chief Financial Officer, Mike Guthrie, said that it will invest in the business to get to a billion users. Before it gets there, consider buying Roblox stock at these greatly discounted levels.

On the date of publication, Chris Lau 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.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.


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