Roblox RBLX recently announced its plan to launch 3D advertising, more popularly known as immersive ads, on its platform in 2023. Per Reuters, immersive ads will only reach audiences aged 13 and above. The company will begin testing immersive ads with developers and advertisers by the end of this year.
The availability of immersive ads will diversify Roblox’s revenue-generating source. Currently, Roblox generates revenues through the sale of virtual items on its platform. Users spend Robux, a digital currency, to buy these virtual items on the company’s platform.
Roblox’s “human co-experience” platform comprises millions of 3D digital worlds (Metaverse) that are entirely user-generated and built by the company’s community of millions of active developers.
Roblox had roughly 1.7 million developers and creators who earned Robux on the platform in the month ending Dec 31, 2021.
Roblox users come to play, learn, communicate, explore and expand their relationships in these 3D worlds. At the end of the second quarter of 2022, Roblox had 52.2 million Daily Active Users (DAUs) globally, which, however, declined from 54.1 million reported at the end of first-quarter 2022.
Roblox Corporation Price and Consensus
Moreover, average bookings per DAUs of $12.25 declined 20.5% year over year but increased roughly 5% sequentially.
Roblox is suffering from a reduced engagement level. In second-quarter 2022, hours engaged declined from 11.82 million to 11.29 million sequentially. Moreover, bookings declined 4% year over year to $639.9 million. Daily paying users also decreased from approximately 676K to 667K. Additionally, monetization per daily paying user decreased 3%.
Roblox shares have underperformed the Zacks Consumer and Discretionary sector year to date. Its shares have declined 54.8% compared with the sector’s decline of 27.1%.
Latest Initiatives to Boost User & Developer Growth
Roblox’s plan to offer immersive ads is expected to attract more developers to its platform. The availability of a more immersive experience is expected to boost user engagement as well as attract new users in the long haul.
Roblox is enhancing its game in various other dimensions as well. The company has been taking initiatives to make the platform experience more engaging in terms of communication and connection.
The chat on Roblox is voice-enabled where players can speak with one another and by next year they will be able to use a webcam to express themselves in real-time through their avatars.
Roblox has also made advancements in its Studio to make the software more user-friendly. It now comes with a fresh look and feel, and the interface has been updated with new features that allow creators to customize their workspace layout and collaborate with teammates with just one click.
Roblox is set to roll out a real-time constructive solid geometry system, which will allow developers to build sophisticated modeling tools in experiences.
The recently launched Layered Clothing by Roblox has been gaining popularity with tie-ups from brands like Puma, Tommy Hilfiger, Gucci Town and many more. Roblox has now onboarded Dundas in collaboration with DressX to offer hyper-realistic and inclusive clothing for users’ avatars.
Roblox is looking forward to building a worldwide cost-performance and reliability-leading infrastructure that includes active performance around the world. For this, it recently deployed a data center in India, expanding availability in Asia.
Roblox’s long-term vision spreads beyond the gaming category as it wants to use its platform to create educational experiences for people. Roblox offers free software and curriculum to teach students various learning programs in STEAM (Science, Technology, Engineering, Art and Mathematics). Its development tool allows students to build 3D worlds, script games, and publish their work online.
Zacks Rank & Stocks to Consider
Roblox currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are BJ's Wholesale Club BJ, Intercontinental Hotels Group IHG and Townsquare Media TSQ. While both BJ’s Wholesale and Townsquare sport a Zacks Rank #1 (Strong Buy), Intercontinental has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ’s Wholesale Club’s shares are up 17.2% in the year-to-date period. The Zacks Consensus Estimate for BJ’s fiscal 2023 earnings is up 8.1% to $3.60 per share over the past 30 days.
Intercontinental Hotels Group’s shares declined 11.9% in the year-to-date period. The consensus estimate for IHG’s 2022 earnings is up 3.75% to $2.77 per share over the past 30 days.
Townsquare Media’s shares are down 36.5% in the year-to-date period. The Zacks Consensus Estimate for TSQ’s 2022 earnings has been unchanged at $2.10 per share in the past month.
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Intercontinental Hotels Group (IHG): Free Stock Analysis Report
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Roblox Corporation (RBLX): Free Stock Analysis Report
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