What’s Wrong With the Video Game Industry? 5 Stocks to Watch

In this article, we discuss what’s wrong with the video game industry and the 5 stocks to watch in the sector. If you want to read our detailed analysis of these stocks, go directly to What’s Wrong With the Video Game Industry? 10 Stocks to Watch. 

5. Roblox Corporation (NYSE:RBLX)

Number of Hedge Fund Holders: 50 

Percentage Loss in Share Price in Past Six Months: 29%     

Roblox Corporation (NYSE:RBLX) owns and runs an online entertainment platform. The stock has gained recognition in the past few months as a popular metaverse play. BTIG analyst Clark Lampen has a Buy rating on the shares with a price target of $133. In a recent investor note, the analyst highlighted the “impressive” user registration numbers of Roblox Corporation (NYSE:RBLX) in the post-COVID economy. In December, Roblox Corporation (NYSE:RBLX) had reported over 30% year-on-year user growth. 

The strong user trends are one of many reasons why Roblox Corporation (NYSE:RBLX) is popular among hedge funds. At the end of the third quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Roblox Corporation (NYSE:RBLX), up from 49 in the preceding quarter worth $4.9 billion.

In its Q2 2021 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks and Roblox Corporation (NYSE:RBLX) was one of them. Here is what the fund said:

“The wonder-tale stories of children’s books show us that there are infinite possibilities of stories and worlds. The metaverse, the idea that describes the shared 3D spaces in a virtual universe, is enabling people to create fiction. Over the past six months, we initiated a new investment in Roblox. The firm was founded in 1989 by David Baszucki and Erik Kassel when they programmed a physics lab where students could study how cars would crash.

Today, Roblox has become a leading platform with a mission to build a human co-experience that enables billions of users to play, learn, and build friendships in the metaverse. Recent advances in cloud computing, computing devices, and machine learning, enable the materialization of the metaverse. Take what we have in virtual reality today and fast-forward a few decades. Humans will be able to experience unimaginable things and in a couple of millennia virtual economies are likely to become bigger than the physical trade on planet Earth.

Over the first quarter of 2021, Roblox reported 140% revenue growth, 42.1 million daily active users, and 9.7 billion engaged hours. The opportunity for this platform is massive.”