One of the top stocks of 2022 could be Roblox Corp. (RBLX). Here are my top four reasons why. For one thing, it’s oversold. Over the last few weeks, RBLX pulled back on new monthly users, and booking metrics were lower than expected. In fact, for November 2021, daily average users were up 49.4 million, a 35% increase year over year. However, as Barron’s notes, analysts at Truist were looking for a number closer to 50.5 million. And November bookings came in between $208 million and $211 million, below Truist’s expectations for $215.5 million.
Now, after catching double bottom support dating back to early November, RBLX is starting to pivot higher, as is RSI, MACD, and Williams’ %R. From a current price of $107.63, we’d like to see RBLX challenge prior resistance around $140.
The second thing to take note of here, is that RBLX is the closest thing to a mainstream social metaverse currently available, with a mission of building a human co-experience platform that, according to the Roblox website, “enables billions of users to come together to play, learn, communicate, explore and expand their friendships.”
Analysts at Emergen Research believe the metaverse market could be worth up to $828.95 billion by 2028.
Third, analysts at Needham are bullish on the gaming stock. As Investing.com reported: “Needham analyst Bernie McTernan is still bullish on the stock, assigning it a positive rating and setting a $136 price target. The analyst said the company is in the early stages of entering the market and is estimated to hold an approximately 1% share.”
Finally, Roblox’s earnings growth is still impressive. In its third quarter, the company said revenue increased 102% over Q3 2020 to $509.3 million, bookings increased 28% over Q3 2020 to $637.8 million, average Daily Active Users (DAUs) were 47.3 million, an increase of 31% year over year.
“Engagement is our north star. We’re very pleased that during the third quarter, people of all ages from across the globe chose to spend over 11 billion hours on Roblox,” said David Baszucki, CEO of Roblox, said in the press release announcing the company’s quarterly results. “We are happy to report that the developer community earned over $130 million in the quarter and is on pace to earn well over $500 million this year. As we finish 2021 and head into 2022, we will continue to invest in innovative technology to enable our developer community to do what they do best—build and create.”
With plenty of catalysts, weakness in RBLX is an opportunity for you.