Analyst expresses scepticism over Roblox’s metaverse vision

Investment analyst Clay Griffin of MoffettNathanson, a boutique research firm, has expressed scepticism about Roblox’s metaverse vision in a new report. Griffin suggests Roblox’s vision for the future of the sandbox game platform and metaverse may be overblown, and its efforts to focus on the big picture are simply obscuring the current setbacks the company faces.

An article published by MarketWatch and circulated via Dow Jones Newswire says the analyst’s report, titled Roblox: Growing Pains, Initiating at Underperform, $19 PT, describes Roblox experiences as “lightweight and derivative,” which may explain why the company is touting its central vision for the metaverse rather than addressing today’s challenges.

“But in a market increasingly fraught about the here and now, Roblox seems to want to pivot the narrative to a distant and, in our view, rose-coloured, picture of the future,” Griffin wrote. “And, of course, its expanded role in it.”

Roblox’s stock value has tumbled to about one-third of its value this year. In 2021, the company reached its peak capitalisation of $78 billion, while the cap was only $20.7 billion as of October 3 trading.

However, Griffin isn’t entirely down on the Roblox. He wrote that he expects a “reasonably good margin profile” for the metaverse company. However, he’s not convinced that “Roblox’s reality will be as grand as its vision.” Noting that Roblox is and remains primarily a games platform, he suggested advertising could be “material” for the company. However, he suggested it’s too early to tell what impacts these ad strategies might have on the company overall.

He also noted that Roblox is continuing to ride the wave of some of the expectations of what he deems “Metaverse mania,” specifically citing the NFT craze that swept through the investment world in late 2021 and 2022.

The analyst suggested a price target of $19, compared with the company’s closing price on Friday of $35.84.

Roblox has been taking strides to rebrand itself as a metaverse company for people of all ages and backgrounds, in contrast to the corporation’s longstanding image as a game company for kids. It recently changed its Entertainment Software Rating Board (ESRB) age rating from ages ten and older (E10+) to teen (T) and introduced voice chat for users 13 and older. Some of these efforts to attract older audiences seem to be working: users 13 and older now account for more than one-half of players on the platform.

Regardless of whether Griffin’s analysis is correct, there’s no doubt that the Roblox of the future will be much different from the Roblox of the past.

You can check out the best Roblox games in 2022 to decide whether Griffin is right to be sceptical about the platform’s popularity. Be sure to also pick up free avatar gear with the codes on our Roblox promo codes list for October, and visit our Roblox music codes for October for songs to play on your boombox.