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Why investors shouldn’t panic about Roblox’s disappointing Q4 report

Fun fact: The metaverse market size is predicted to reach as much as $800bn by 2024 — it was worth just $46bn in 2020.

Roblox [RBLX] investors will be wishing that Q4 was just a simulation, but unfortunately, there’s nothing virtual about its numbers.

Is the metaverse dream in for a rude awakening? 

This article was originally written by MyWallSt. Read more insights from the MyWallSt team here.

How did Roblox do?

As a writer, I’m incapable of enjoying numbers, whether good or bad, so let’s keep the numeric information from Roblox’s Q4 brief:

Revenue (bookings): $770m versus $772m expected

Loss per share: $0.25 versus $0.13 estimated

Daily active users: 49.5 million— up 33% year-over-year

Ok, a little bit of good to top it off, but those losses must be a tough pill to swallow for investors. After all, this open-world gaming/development platform, which allows users to interact and play over the internet, is supposed to be the pioneer of the metaverse, right? 

That may be correct, but one can’t simply say “metaverse” and suddenly be a trillion-dollar business — sorry Zucks. Our modern conception of the metaverse — read all about what it is free in the MyWallSt app here — is barely a toddler.

Meta (formerly Facebook), has tried to steal the metaverse spotlight — hence the name — and has dedicated billions towards its pivot. However, while Zuckerberg & Co. are clearly serious about this endeavour, they are still years behind Roblox. So, for anyone concerned about a big tech overshadowing, just think of streaming. 

Amazon, Disney, HBO, and more were expected to destroy Netflix with their streaming offerings. Now, name me a single service from this lot that can match Netflix’s user experience? 

None — and trust me, a metaverse is a LOT more complicated to build from scratch than a user-friendly content library. Big tech won’t be overtaking Roblox soon.

Roblox may be hurting, but it’s still a leader in the metaverse. This shouldn’t be taken lightly, and investors just need to be a bit more patient. 

Virtual Rome wasn’t built in a day.

 

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Disclaimer Past performance is not a reliable indicator of future results.

CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.

*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.

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