It’s been almost a year since Roblox went public, and this week the company’s explosive growth has taken a turn that should raise a few eyebrows and prompt pause when it comes to the metaverse.
Shares of the company hit a 52-week high in November when shares surged above $141. While the stock price has been falling for the past few months, at the time of this writing the shares are trading around $55. After trading around $73 after hours, shares took a dive yesterday morning when Roblox revealed the fourth quarter and annual income for 2021 below expectations.
While revenue grew 108% from 2020 to $1.9 billion and hours incurred saw a 35% year-over-year gain, the company posted a loss of 491 million for the year, compared to $253 million in 2020.
Roblox also relies on “reservations,” which it defines as “revenue plus the change in deferred revenue during the period and other non-cash adjustments.” It’s all the Robux virtual currency that parents and grandparents buy for children and could be redeemed later. And, while bookings grew 45% last year to $2.7 billion, the company says average bookings per daily active user (ABPDAU) fell nearly 23% in January, the first month of the new year of income.
“With nearly 55 million daily active users, Roblox is becoming an increasingly integral part of people’s lives,” said David Baszucki, CEO of Roblox. “As we look to 2022, we will continue to develop our technology to enable deeper forms of communication, immersion and expression on our platform.”
According to the company’s chief financial officer, Michael Guthrie, Roblox’s cash burn is tied to long-term technology investments.
“One of the most unique aspects of our business is the foundation we’ve put in place that allows us to invest in our business while continuing to generate strong cash flow,” says Michael Guthrie. “Our 2021 results demonstrate that the investments we’ve been able to make in our technology and developer community are delivering strong returns, and we’ll continue to look at the business as we focus on the big, long-term growth opportunity. term that awaits us.”
For Roblox, growth comes from external licensing and entertainment content from major toy companies including Hasbro (Roblox-branded NERF blasters), Jazwares (action figures and playsets), WowWee (Twilight Daycare dolls) and others .
But a major problem that Roblox needs to tackle internally is the abuse of its platform as more companies start playing in its sandbox, much like YouTube plays “whack- a-mole” for years to remove unsavory content aimed at children. its platform.
A new report from Vice this week details some of the ways hackers and other unscrupulous individuals scam children within the Roblox platform. Then, on Wednesday, BBC News called Roblox “The game of children with a sexual problem.” Additionally, adult content would have been associated with images related to a certain fascist group that was defeated in Germany during World War II.
Additionally, as companies such as Roblox place more emphasis (and dollar signs) on daily users and time spent “engaging” with screens, the effects on mental health – especially on children – are a growing concern that comes just months after the Academy of Pediatrics. , American Academy of Child and Adolescent Psychiatry and Children’s Hospital Association declared a “national emergency” concerning the well-being of children.
Ultimately, the so-called “metaverse” and the concept of user-generated content living in a virtual world and being bought and sold using virtual currency is nothing new. second life launched in 2003 and continues to operate with a platform that essentially serves as a template for what Roblox does now.
Unfortunately, the best parts of Roblox can quickly be tarnished by bad actors. It’s a virtual world that runs the real risk of reflecting the more nefarious elements of the real world…and it might not be as valuable as some once thought.
To know more Roblox and the Metaverse, check out our exclusive article in the February 2022 issue of the toy bookavailable digitally, Saturday, February 19, 2022.