Wedbush is bullish on Roblox Corp (NYSE:RBLX), calling it the most exciting growth stock in the video game world right now.
Why? A run of hit games has sent player numbers through the roof, and the company is only just getting started with turning all those users into revenue.
What’s happening? Roblox just had a record quarter for concurrent players, the number of people logged in at once.
That’s thanks in part to viral games like “Grow a Garden”, and Wedbush thinks the next set of results could break even more records for user numbers and bookings (that’s the value of in-game purchases and virtual currency sales).
But here’s where it gets really interesting for investors.
Roblox is only now starting to make money from the 80% of player time that’s not monetised, through new advertising formats like “rewarded video ads”, launched with Google. In short, there’s a huge untapped market, and Wedbush reckons this could supercharge the company’s ad revenue.
Roblox is also giving developers a bigger share of in-app purchase income.
The idea is simple: more money for creators means better games on the platform, attracting even more players and, ultimately, more revenue for Roblox. Wedbush expects the company to hit 20% annual growth for the next few years, right in line with management’s guidance.
With all that in mind, Wedbush has raised its price target to $142 (from $110), arguing there’s plenty of upside left as user numbers climb and new revenue streams open up.
In their view, Roblox isn’t just a kids’ game; it’s turning into a genuine global platform for gaming and socialising, with lots of room still to grow.