Roblox is facing changes
Digital entertainment is a rising field, and Roblox is a much-talked-about company in this industry today. The company has had a wild ride with its stock plummeting during May, and it seems to be seeing better days ahead.What news is the company planning, and is their stock a potential opportunity for investors?
Haven't heard about Roblox yet?
Roblox Corporation has developed an online entertainment platform. The latter allows players to create their own open-world games, then share them with other players and play in them. The American company was founded in 2004 and is based in San Mateo, California. It currently operates in the US, UK, Canada, Europe, China, Asia Pacific. The source of revenue is currently more or less only from revenue generated by in-app purchases using the virtual currency Robux.
We saw a sharp jump in the value of the stock in November 2021, when it hit a record high of $141.60. The unexpected drop came on May 10, when they plunged to their lowest level, at $21.65 per share. The reason for this was that investors started to dump unprofitable tech company stocks due to the Fed's interest rate hikes. Subsequently, we could see an improvement and the value of the stock started to rise by about 110% and finally ended at $45.53.
In August this year, Roblox released its second quarter financial results where we could see that revenue growth slowed to 30% from over 100% a year ago. Year-to-date, we're still seeing declines of up to 56%, and the stock is about 70% below its all-time high. The following changes at the company bode well for the stock to rise again. These days, the stock is at about $46.
Roblox Corp's stock performance since going public. Source: investing.com
Upcoming changes at Roblox
The biggest new feature the company plans to introduce is online advertising, which it hopes to generate additional revenue from. This decision comes at a time when the online advertising industry is in chaos and giants like Meta and Snap are struggling to adapt to the GDPR change in Apple's iOS. Immersive ads could be the future for the company. Also crucial will be the development of the metaverse, where ads from the Roblox Company should be. This means that right in the online world where people are socialising, they could appear as digital billboards through which customers can buy all sorts of products.
The reorganizational changes are also expected to be announced as part of the company's annual developer conference on Friday, where the company will also talk about plans to introduce ads. The company's 2021 stock surged 25% during the week of the conference after revealing plans to become a leader in the metaverse.* So be sure to keep an eye out for not only Roblox news but also metaverse development news.
*Past performance is no guarantee of future results.
 Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
Lucia Žárská, analyst of ProfitLevel
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