Send me real-time posts from this site at my email
Motley Fool

Why Roblox Stock Skyrocketed 50% in November

What happened

Shares of Roblox (NYSE: RBLX) rocketed 50.1% in November, according to data from S&P Global Market Intelligence. This performance compared with the S&P 500 index's 0.8% decline last month. The catalysts for the gaming platform operator were its strong third-quarter results and investor excitement about its potential to be a big player in the metaverse, a highly immersive virtual world where people can interact.

Since the company went public in March via a direct listing on the New York Stock Exchange, shares are now up 63% from the opening price on the first trading day. The S&P 500 has returned 15% over this same period.

Image source: Getty Images.

So what

On Nov. 9, Roblox stock soared 42% following the company's release of its third-quarter results, which showed that revenue surged 102% year over year to $509.3 million. Growth in key engagement metrics was also robust: Revenue bookings increased 28% to $637.8 million, average daily active users (DAUs) jumped 31% to 47.3 million, and hours engaged rose 28% to 11.2 billion.

Results were better than these numbers suggest because the company had tough year-over-year comparables stemming from the pandemic. In the year-ago period, people stayed home much more than usual, driving a surge in video gaming.

Net loss was $74 million, or $0.13 per share, compared to a net loss of $48.6 million, or $0.26 per share, in the year-ago period. Despite posting an accounting loss, the company is making money from a cash standpoint. Operating cash flow edged down 2% year over year to $181.2 million and free cash flow increased 7% to $170.6 million.

Along with posting strong quarterly reports, Roblox stock has been getting a tailwind from investor optimism about the company's potential to be a beneficiary of growth in the nascent metaverse.

Now what

Wall Street is expecting Roblox's fourth-quarter revenue to rocket 152% year over year to $782.6 million, and its loss per share to widen 27% to $0.14.

With the company's powerful sales growth and potential to win as the metaverse takes off, its stock has the makings of a long-term winner.

10 stocks we like better than Roblox Corporation
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Roblox Corporation wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 10, 2021

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Roblox Corporation. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue