Video game platform Roblox (RBLX) saw shares soar Tuesday after the company hit Wall Street’s third-quarter target and showed strong user engagement. Roblox shares rose more than 25% on the news.
The San Mateo, California-based company reported late Monday orders of $ 637.8 million in the September quarter, up 28% year-over-year. Analysts expected orders of $ 636.5 million, according to FactSet.
Average daily active users increased by 31% from the previous year to 47.3 million in the third quarter. It showed an acceleration in growth from the second quarter when users rose 29% to 43.2 million.
Time spent on the platform increased by 28% year over year to 11.2 billion hours in the September quarter. In the second quarter, committed hours increased by 13% to 9.7 billion.
Roblox stock is rising
In the morning trading on the stock market today, the Roblox share jumped 26.2%, close to 97.20. During the ordinary session on Monday, the Roblox share fell 1.3% to 77.
“Commitment is our North Star,” CEO David Baszucki said in a news release. “We are very pleased that during the third quarter, people of all ages from around the world chose to spend over 11 billion hours on Roblox.”
CFO Michael Guthrie added: “Growth in all our core values - DAUs (daily active users), hours and orders – showed strong year-on-year growth despite periods affected by Covid and back-to-school seasonal variations. “
Roblox lost 13 cents per share on revenue of $ 509.3 million in the third quarter. In the same period last year, it lost 26 cents per share on revenue of $ 251.9 million.
Roblox Stock is a metaphorical investment game
The Roblox share is considered a play on the new meta-verse, a next-generation version of the internet. Technologists describe the meta-verse as a sustainable, shared, virtual 3D environment for socializing, entertainment and business.
Some analysts believe video game platforms will lead in metavers.
“Despite the hype surrounding ‘metaverse’, the only companies that can succeed in metaverse are gaming companies,” said Activate Consulting CEO Michael Wolf in a recent report. “The only viable path to the metaverse is through gaming platforms. Anyone who bets on a metaverse platform other than gaming bets on the wrong horse.”
Take-Two is ‘Largest Metaverse Company’
Strauss Zelnick, CEO of Video Game Publisher Take-Two interactive software (TTWO), told Investor’s Business Daily that his company can be considered a metaphorical company with the virtual worlds it has created with games such as “Grand Theft Auto Online.”
“Depending on how you define the meta-verse, we not only play in it already, but we lead in it,” Zelnick said. “I would argue from an income and earnings point of view, we are the largest metaverse company.”
Meanwhile, software giant Microsoft (MSFT) is reportedly planning metaverse apps for gaming. This may include versions of games such as “Minecraft”, “Halo” and “Microsoft Flight Simulator”.
To date, Microsoft has largely focused on metaverse applications for enterprise users. At the company’s Ignite 2021 online event on November 2, Microsoft unveiled its latest innovations for enterprise metaverse. They include Dynamics 365 Connected Spaces and Mesh for Microsoft Teams.
Metaverse exchange traded funds
At least two exchange-traded funds have emerged to invest in metaverse companies.
The top stock for the Roundhill Ball Metaverse ETF (META) is Nvidia (NVDA), Microsoft, Roblox shares and Metaplatforms (FB), the company formerly known as Facebook.
The top stock of the Fount Metaverse ETF (MTVR) is apple (AAPL), Meta and Alphabet (GOOGL).
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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