Roblox Building Its Potential, Monetization Capabilities Are Coming

Ever since Meta Platforms (FB) shifted its general focus to the metaverse, investors eyes have been seeking the next big players for that realm of Web3. One of the major players cited for growth in the virtual reality world is Roblox Corporation (RBLX), developer of the Roblox social gaming platform.

While its stock price has seen considerable gains as positive investor sentiment and interest pours in, analysts have done their research, and the bullishness is palpable.  

Needham & Co. Analyst Is Bullish

Initiating his coverage on the video game developer is Bernie McTernan of Needham & Co. He explained that while the firm is staying afloat, it has far more room to run in regard to monetization opportunities for both itself and third-party developers.

After running a survey, the analyst reported that strong engagement and networking trends exist within Roblox’s installed base and that the company has plans to increase its age range in the future.  

McTernan rated the stock a Buy and assigned a price target of $136.  

From Needham’s survey, more than half of the respondents said they played the game with a friend, and about that same amount noted they had attended a virtual concert. The analyst was also encouraged by Roblox’s international expansion and the upward trajectories for both consumer spending within the platform and potential for advertisers.  

Roblox is seen as more than just a game, as its wider entertainment, apparel, and social networking capacities provide the company with a far larger total addressable market. One thing McTernan was pleased to add, is that he does not believe the opportunities for monetization have been baked into the share price just yet.  

He also added that the materialization of the metaverse is unnecessary for decent returns on Roblox stock, stating that investors need not “dream the dream of the long-term metaverse to be bullish on shares.”

As far as attracting developers to its platform, McTernan sees Roblox as a solid opportunity based on its relatively low costs in regard to factors like user acquisition, compared to “those isolated in app stores.”  

When dealing with acquiring users and driving up engagement, Roblox investors seem to place too much emphasis on reported monthly metrics. While this can affect shares in the near term, McTernan is confident that more developers will be attracted to the platform once monetization is more capitalized on.  

Wall Street’s Take

Turning to Wall Street, Roblox enjoys a Moderate Buy consensus rating based on eight Buys, two Holds, and one Sell rating. The average Roblox price target is $116.90 implying 33.3% upside potential.

The stock ended the week at a price of $101.93, as the market is closed tomorrow in observance of Christmas Day. (See the full list of stock market holidays)  

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article.