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Discussing the firm’s bullish view on the stock, Canaccord Genuity analysts noted shares of Roblox have been volatile since going public in early 2021, as investors have grappled with the proper valuation for a business that has experienced large fluctuations in its growth rate and margins.
Roblox had a significant pull-forward of adoption during COVID, with the user base more than doubling and bookings more than quadrupling during 2020 and 2021. This was followed by a period of slower growth.
“Growth slowed amid difficult comps and the reopening, although bookings growth has reaccelerated as several strategic initiatives have begun to take hold,” said the analysts.
They added, “we see the potential for upward estimate revisions if Roblox can execute on strategic initiatives to attract more spending to the platform, with a long-term opportunity to enter new verticals as technological advancements enable mainstream adoption of the metaverse.”
