Right after the publication of its results on November 7, by Roblox (NASDAQ:RBLX) the stock jumped 40%. It hasn’t stopped since.
RBLX stock has risen further in recent days, breaking through a solid resistance level at $ 90 and breaking above the $ 140 mark. and although it has retreated slightly, Roblox is on the rise again. I think this could start an uptrend.
The stock price jump was caused by massive earnings surprise. But there is a lot to like for the long term investor. Excitement is building for the concept of metaverse and large companies are signaling their interest in the concept.
Roblox has a head start in this space because it has already built its platform.
The metaverse, the future of the Internet
The concept of metaverse has gained much more attention in recent weeks with Meta-platforms ” (NASDAQ:FB) announces that he is changing his Facebook name. In the announcement, founder Mark Zuckerberg laid out his vision for what a metaverse would look like over the next decade. He mentioned the metaverse as the next iteration of the web, but what exactly does that mean?
The term was coined in 1992 by author Neal Stephenson where he envisioned a world of avatars that met in virtual reality environments. The film The matrix actually brought the concept of a digital virtual world into the mainstream in 1999.
The beginnings of such a technology to create this kind of hyper-real alternate world are already in development. Companies are betting big on augmented reality, virtual reality, 3D holographic avatars and other technologies.
Roblox is the cornerstone of the metaverse
At its core, however, a metaverse is just a virtual environment. In this environment, users stay connected with their friends, work and play. They can also undertake common experiences like taking virtual trips or watching concerts. The technology simply increases the immersion factor. Having users already on the platform to do these things is a huge competitive advantage. This is where I believe Roblox really shines.
Roblox is a virtual platform where users can play games, build houses, and explore immersive 3D experiences. According to Comscore (NASDAQ:SCOR), the platform is one of the best online entertainment platforms for teens and children. Like any network, the more people sign up for Roblox, the more valuable and popular it becomes. This creates a positive ripple effect for the company.
If you take out all future advanced technology, Roblox already has the essentials for a proper metaverse. Users interact in this virtual world in multiple ways. Additionally, the company has partnered with real-world businesses to bridge the gap between virtual and real experiences. One of those partnerships is between Roblox and the sneaker company Vans (NYSE:HRV). The two companies launched a virtual metaverse-style skatepark on the platform.
According to the press release:
Vans World will provide a persistent 3D online space for visitors to practice their virtual skateboarding skills and, no coincidence, view and purchase exclusive Vans clothing, footwear and other gear right in. a showcase of the virtual location. The site will offer a shoe customizer and a full skate shop to build the perfect board.
Another event was the Gucci Garden, where users can purchase unique items for their virtual avatars. It may seem silly to buy “clothes” for your virtual self. However, virtual items are big business, as evidenced by the popularity of NFTs. In fact, one user spent $ 4,115 on a limited edition Gucci virtual handbag. Note that this virtual item was more expensive than its real counterpart.
It shows the potential appeal of the metaverse and the blurring of the virtual and reality in the minds of consumers.
The result on the RBLX stock
So, is it too late to invest in Roblox? In my mind, the answer is no.
I think the business is just getting started and is on the path to growth. RBLX stock currently has a market cap of $ 78 billion. Considering that Meta Platforms has gone all out on the metaverse demonstrates Roblox’s potential, I think RBLX stock could jump 5-10x higher in the long run.
At the date of publication, Joseph Nograles held a LONG position in FB. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.