Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial company committed to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investment solutions, free Fool. com recommendations, and market analysis. top-notch podcasts and the Motley Fool Foundation, a non-profit organization.
When I was a kid, video games were straightforward: stay alive, progress through the levels, beat the final boss, and win the game. For my kids, however, the objectives are totally different. Nowadays gamers socialize, build, buy and sell, and play out possibilities not limited by finite game constructs.
To illustrate what I’m talking about, I’ll use a recent example from the Volkswagen Group (VWAGY 1. 01%). The company’s premium Lamborghini logo has just sold 3 virtual pieces on Roblox (RBLX 1. 34%) for 1,500,000 Robux. Robux is the in-game currency. Lamborghini’s virtual parts were temporarily sold out despite their high value.
At the time of writing, 22,500 Robux can be purchased for $199. 99. This means that 1,500,000 Robux costs more than $13,000 at this price.
Video games are what they used to be. The first edition of the metaverse is already here, and Roblox would possibly be ahead of the rest of the bunch.
Roblox isn’t a video game platform in the traditional sense. In the company’s own words, Roblox’s 70.2 million daily active users “create, play, work, learn, and connect with each other in experiences built by our global community of creators” [emphasis added]. And as it turns out, Lamborghini is part of that global community of creators.
Lamborghini has created an experience on the Roblox platform. Users can design a traditional edition of the company’s upcoming electric vehicle (EV), the Launcher, and compete with other users.
It’s a way for Lamborghini to create awareness for its new product and foster engagement from consumers. Lamborghini isn’t alone in building such experiences on Roblox. Athletic apparel retailer Nike has Nikeland. And even Walmart has Walmart Land.
Many versions of Roblox are available to users. However, there are virtual pieces that can be purchased, such as Lamborghini’s Golden Bullhead. It is an accessory that can be used during the user’s character. The company submitted 3 of them for the hefty value of 1,500,000 Robux, but they were temporarily sold out.
Lamborghini’s Golden Bullhead is more than just a virtual accessory. Owners are entitled to an excursion to Lamborghini headquarters, as long as they cover their own expenses. There will also be other real-world benefits, though the company has yet to reveal which ones.
When investors think of the metaverse, they think of a futuristic concept in which adopters are transported to virtual worlds through virtual truth headsets and other haptic devices. And that edition may come one day. But for now, the metaverse looks a lot more like Roblox.
Roblox stands out from older video games because of the game’s economy. Everything in Roblox is user-generated, like the Golden Bullhead created through Lamborghini. Users buy Robux from Roblox, spend it on pieces from creators, and Roblox will then pay creators a piece. of the cake.
This all comes with some pretty favorable economics for Roblox. The company’s gross profit margin is 76% and has steadily increased since the company went public. It’s not a profitable business in large part because of how much it spends on research and development. But that shouldn’t overshadow its impressive gross margin, which points to future net profit potential.
I’m not necessarily saying that Roblox inventory is a buy today; In fact, trading at roughly 11 times sales is an expensive investment.
That said, it’s vital for investors to understand that Roblox is much more than just a video game company. It turns out that other people are interested in virtual reporting and this platform is now one of the largest in the world.
Moreover, with 70. 2 million active users, Roblox is very likely to expand a network effect: more corporations like Volkswagen, Nike, and Walmart will be attracted to the platform due to its gigantic user base. And as those reports grow, you may simply attract even more Roblox users.
Therefore, Roblox inventory is something to keep in mind. Not each and every user will spend $13,000 to buy a virtual item, but millions of users are willing to spend even a little money in the virtual world, which benefits the company.
Jon Quast has positions in any of the stocks mentioned. The Motley Fool holds positions and recommends Nike, Roblox, Volkswagen Ag, and Walmart. The Motley Fool recommends the following options: January 2025 long calls at $47. 50 at Nike. The Motley Fool has a disclosure policy.
Market knowledge driven through Xignite and Polygon. io.