Best Metaverse Stock: Roblox Vs Unity Software

Investors can benefit in many ways from the metaverse, a evolving technology that aims to connect people located anywhere on Earth in a three-dimensional virtual world.

Roblox (RBLX -4.55%) and Software unit (U -5.03%) are the two companies that can help make the metaverse a reality. Roblox provides a platform for developers to create, publish, and run 3D experiences, and allows users to use these experiences on a wide variety of tools. Unity Software, on the other hand, allows developers, creators, artists, engineers, designers, and architects to create interactive, real-time 3D content.

In simpler terms, Roblox and Unity Software are both pick and shovel games in the metaverse because they are in the business of creating 3D content like virtual worlds and digital twins. Which of these two metaverse stocks should you buy right now? We will find out.

Image source: Getty Images.

The case of Roblox

The adoption of 3D virtual worlds is already positive in Roblox. The company has a strong 2021 with revenue of 108% to $ 1.9 billion and daily active users of up to 40% to 45.5 million. In addition, the company’s daily active user base grew to 55 million in February, 28% annually.

It’s also worth noting that Roblox users spent 41.4 billion hours on its platform last year, a 35% increase from last year. The company’s strong user base and commitment is why big names from musician David Guetta to the NFL are using its platform to grow their presence in the metaverse.

Meanwhile, the company’s virtual currency, known as Robux, is already very popular. Users can purchase Robux to upgrade their avatars in virtual worlds, using virtual money to purchase in-game items that can range from clothing to accessories and even pets. Roblox users spent $ 2.7 billion last year on buying Robux, as reflected in the company’s number of bookings.

Overall, Roblox’s ecosystem of 29 million developers, 11 million virtual experiences, a large user base, and a popular virtual currency makes it an ideal platform for brands seeking to enter the metaverse. Nike, for example, has already created a virtual world of Roblox. Other brands like Forever 21, Vans and Ralph Lauren Roblox is also used to enter the metaverse.

The metaverse is expected to grow at an annual growth rate of 47% by 2029, according to a third -party estimate. So, as more users enter the metaverse, more businesses will be motivated to jump into the virtual world and expand the Roblox responsive marketplace. This explains why analysts expect Roblox to see impressive growth.

Chart of RBLX revenue estimates for the current financial year

RBLX revenue estimates for the current financial year provided by YCharts

The case with Unity software

Unity Software is well known for its Unity video game engine, which is used by developers to make games available on a variety of platforms such as computers, consoles, and mobiles. Unity is now leveraging its gaming expertise into the metaverse by focusing on creating real-time 3D content for a variety of industries from retail to architecture to automotive to creating digital twins, and etc.

The good part is that the company’s non -game business is impressively gaining ground, indicating that it could have benefited from the metaverse. Unity reported a 70% increase in non-gaming revenue in 2021. Unity management told the company’s February earnings conference call that the non-gaming business accounted for 25% of the $ 326 million revenue earned. on the “create solutions” segment by 2021. For comparison, the non -game business generated 20% revenue for the production segment solutions by 2020.

Leading companies use Unity solutions to create digital twins – virtual 3D representations of real objects. Giants in South Korea Hyundai Motors, for example, partnered with Unity to create a digital twin in a real factory to be used in its efforts to improve factory management, increase productivity, and streamline the manufacturing process. Meanwhile, eBay uses Unity solutions to help “vendors present the actual item they offer in our proprietary interactive 360 ​​° view”.

There were several other partnerships discussed by Unity’s management during the company’s most recent revenue conference call, showing that its 3D rendering solutions are being adopted by various industries. The adoption of Unity solutions should better grow stronger over time, as the metaverse is expected to drive demand for digital twins and other 3D applications. The digital twin market, for example, is expected to reach $ 48 billion in revenue by 2026, up from $ 3 billion in 2020.

As such, Unity Software has many areas to increase its revenue. The company generated $ 1.1 billion in revenue last year, up 44% from 2020. It also expects to maintain momentum in 2022, with revenue expected to rise 35% amid its guidance of nearly $ 1.5 billion. . In addition, analysts are optimistic about the company’s long -term prospects, as they expect its revenue to grow at an annual rate of 69% over the next five years.

But what is the best metaverse stock?

Roblox and Unity are progressing at a good pace and as the track to benefit from the metaverse. However, with a selling price ratio of 11.1, Roblox is the cheapest option for investors. Unity Software is more expensive at 23 times sales, even after seeing slower growth last year.

As such, investors looking for a relatively inexpensive metaverse stock may want to take a closer look at Roblox given the combination of better value and faster growth.

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