Video game platform Roblox earned a bullish initiation report from a Wall Street firm on Friday as the company positions itself for the virtual worlds of the coming metaverse. But Roblox stock fell on Friday during a rough day for stocks overall.
Deutsche Bank analyst Benjamin Black started coverage of Roblox stock with a buy rating and a price target of 60.
On the stock market today, Roblox stock dropped 5.4% to close at 39.24.
Roblox offers users a digital platform for shared online experiences, including video games, virtual concerts, and social gatherings.
In a note to clients, Black called Roblox stock "the next platform play." He said it is similar to other large marketplaces such as Amazon.com, Uber and Alphabet's YouTube.
In Roblox's case, its large developer community is its key competitive advantage, he said. Over the last three years, Roblox has more than doubled its developer community, with almost 10 million on the platform today.
Roblox Stock Down Over 70% From Peak
"We see Roblox as an early leader in the interactive digital creator marketplace, with growing moats and strong network effects," Black said.
In January, Roblox had 54.7 million daily active users, up 32% year over year.
"While pandemic (comparisons) will slow growth in 2022, we see multiple paths to 96 million daily active users by 2025," Black said.
Roblox stock has been hammered during the current market correction. From its all-time high of 141.60 on Nov. 22 to Friday's close, Roblox stock has crashed 72% in value.
On Feb. 15, the San Mateo, Calif.-based company disappointed with its fourth-quarter results and guidance.
Deutsche Bank on Friday initiated coverage on a host of internet stocks, including Roblox. It listed six stocks as its "top ideas" in the sector. They are Amazon, Chewy, Expedia, Match Group, Meta Platforms and Uber.
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