Metaverse Investing: Roblox Vs. Unity, THE Ultimate Match at the top

Roblox (RBLX -0.62%) and Unity Software (U 6.17%) both saw their stocks hit all -time highs last November, when investors flocked to high -growth “metaverse” stocks. However, investors following these rallies have been hit hard as rising interest rates have crushed the market’s most expensive growth stocks.

As of this writing, Roblox and Unity stock prices are down about 75% and 80%, in fact, from their long periods. Should investors consider buying any stocks in the Fallen Metaverse to recoup this tough market?

What happened to Roblox?

Roblox’s platform allows its users to create simple block-based games without any coding knowledge. Its creators can share their games with other users and then monetize them using in-game items and features. See the article: Genshin Impact 2.7: A new livestream date for the game has been revealed, along with characters and banners. These purchases are funded by an in-game currency called Robux.

Roblox’s simple interface appealed to tweens, and its popularity skyrocketed throughout the pandemic as many college students stayed home. However, like other examples of growth during the pandemic, Roblox’s growth slowed in the face of difficult year-on-year comparisons as the locks ended.

Roblox’s revenue will grow 82% to $ 924 million in 2020 and then 109% to $ 1.9 billion in 2021. Its revenue – which will help more accurately measure its underlying growth by measuring its Robux direct sales – grew 171% to $ 1.9 billion by 2020, but grew only 45% to $ 2.7 billion by 2021.

This slowdown in post-blocking is reflected in its other metrics: The number of daily active users (DAU) grew 85% to 32.6 million by 2020, but grew only by 40% to 45.5 million in 2021. The average booking per DAU (ABPDAU)) increased 47% to $ 57.77 in 2020, but grew only 4% to $ 59.85 in 2021.

In the first quarter of 2022, Roblox’s revenue grew 39% annually to $ 537 million, but its reservations fell 3% to $ 631 million. Its DAUs increased 28% to 54.1 million, but its ABPDAU decreased 25% to $ 11.67 because these users spent less money. Its bookings and the ABPDAU continued to decline throughout April, and analysts expect its bookings to grow by just 4% throughout the year.

Roblox’s progress has been slow, but the company is still swimming in red ink. Its net loss expanded from $ 253 million in 2020 to $ 492 million in 2021 and then from $ 134 million to $ 160 million in the first quarter of 2022.

Its revised earnings before interest, taxes, depreciation and amortization (EBITDA) also fell 64% from a year earlier to $ 68 million in the first quarter, and analysts expect that to numbers will fall by 43% throughout the year.

What happened to Unity?

The Unity game engine is used to make more than half of the world’s mobile, console and PC games. You may be interested in this: AEW Fight Forever: The player list of the game and the platforms on which it will be released. Its Operate Platform integrates a variety of authoring tools for graphics, sound, and other assets, while its Operate platform provides integrated advertising, analytics, and payment services.

Unity also provides tools for virtual reality, augmented reality, and non-game applications. Its recent acquisition of Weta Digital, which has created special effects for movies like The Lord of the Rings and TV series like Game of Thrones, has expanded its market reach. in filmmaking.

The merger initially attracted investors with its impressive growth. Its revenue will grow 43% to $ 772 million in 2020 and then 44% to $ 1.1 billion by 2021. The company has also repeatedly told investors that it will increase its annual revenue by more than 30% on high. term. Its revenue grew another 36% year-over-year to $ 320 million in the first quarter of 2022.

Unfortunately, Unity dropped a bomb on its investors in its Q1 report. The company claims that its Audience Pinpointer tool, which uses machine learning algorithms to deliver targeted ad campaigns, contains a lot of “bad data,” making it impossible to monetize. some ads. It now needs to rebuild the algorithm, and this reset will result in an estimated $ 110 million reduction in its annual revenue.

As a result, Unity now expects revenue to grow by 22% to 28%, well below the estimated combined (at the time) 31% growth. Unity says long-term growth targets remain untouched, but the next few quarters will be difficult because its software issues need to be resolved.

Unity’s net loss expanded from $ 282 million in 2021 to $ 533 million in 2021, in part due to Weta’s acquisition, and expanded year-over-year to 107 to $ 178 million in the first quarter of 2022. Based on generally accepted accounting principles (non-GAAP), its net loss decreased slightly from $ 66 million in 2020 to $ 62 million in 2021, then decreased year-on-year from $ 27 million to $ 25. million in the first quarter.

Analysts expect Unity to remain non-profit on a GAAP basis over the next few years, but the company believes it will achieve non-GAAP profit by 2023.

The evaluations and the judgment

Roblox is trading at six times its estimated revenue this year, while Unity is trading at seven times its planned revenue for the year. These short values ​​may limit their potential downside in this difficult market, but both communitys very deficient in short-term catalysts.

I’m not in a hurry to buy any of the stock right now. But if I choose one over the other, I will choose Unity because his growth will accelerate once he heals the wounds he has inflicted on himself. See the article: PS Plus predictions for April 2022 and possible MLB 22 release. Roblox’s future is more uncertain, as the company has yet to prove it can deliver sustainable growth in a post-lockdown market.

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