Again, Use Weakness in Roblox as an Opportunity

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On June 16, we mentioned investors should use weakness in Roblox (RBLX) as opportunity.

All after the company said daily active users fell by 1% from 43.3 million month over month. Shortly after, the stock would climb from about $80 to $94.

Today, it’s at $84.75 after Benchmark analyst, Mike Hickey initiated coverage of the stock with a sell rating and a $75 price target.  As noted by TheFly.com, “While he believes Roblox offers a unique and compelling investment opportunity, the metaverse platform was a social utility during the pandemic that could unwind as social restrictions are removed and schools reopen.”

While that’s a common fear among some investors, we don’t believe that will happen.

In fact, according to Take-Two Interactive CEO Strauss Zelnick, as quoted by GameSpot, “Interactive entertainment is now the number one entertainment vertical in terms of revenue, and I guess people still don’t fully realize that. And a good deal of that growth was driven by people either discovering or rediscovering interactive entertainment and its social aspects during the pandemic. And what we’ve found is that while certain trends should be expected to moderate, that shift is permanent.”

In addition, Luobu (Roblox China) officially launched in partnership with Tencent, one of the world’s largest video game publishers.

 

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