Two Metaverse Stocks Tumble On Disappointing First-Quarter Reports

Two video game companies hoping to play major roles in the anticipated metaverse — Roblox (RBLX) and Unity Software (U) — late Tuesday delivered disappointing results for the first quarter. The two metaverse stocks tumbled on the news.




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San Mateo, Calif.-based Roblox lost 27 cents a share on bookings of $631.2 million in the March quarter. Analysts polled by FactSet expected it to lose 22 cents a share on bookings of $655.7 million.

San Francisco-based Unity lost an adjusted 8 cents a share on sales of $320.1 million in the first quarter. Wall Street had predicted a loss of 8 cents a share on sales of $320.8 million.

Both companies are unprofitable and currently in investment mode.

Metaverse Stocks Drop

In after-hours trading on the stock market today, the two metaverse stocks fell. Roblox sank 3.5% to 22.38. Unity Software crashed 25% to 36. Both metaverse stocks have been on a steep slide this year.

Roblox stock hit its all-time high of 141.60 on Nov. 22. Unity stock notched its record high of 210 on Nov. 18.

Roblox ranks No. 11 out of 22 stocks in IBD’s video game software industry group, according to IBD Stock Checkup. It has a poor IBD Composite Rating of 11 out of 99. The Composite Rating scores a stock’s key growth metrics against all other stocks regardless of industry group.

Unity stock ranks ninth out of 12 stocks in IBD’s design software industry group. It has an IBD Composite Rating of just 16, according to IBD Stock Checkup.

Creating Virtual Worlds

With video game stocks in the dumps, Roblox and Unity are positioning themselves as providers of tools and services for creating the metaverse. The metaverse is a future version of the internet with immersive 3D virtual worlds replacing static 2D websites.

Roblox reported healthy growth in users and usage of its online video game and social platform in the March quarter. But bookings fell 3% year over year and missed estimates. Plus, it said bookings were down 8% to 10% year over year in the month of April.

Roblox said it had 54.1 million average daily active users in the first quarter, up 28% from the same quarter last year. Hours engaged on the service totaled 11.8 billion, up 22%.

Unity Software, which offers a platform for creating and operating interactive, real-time 3D content, badly missed views with its sales guidance for the second quarter and full year.

For the current quarter, Unity predicted sales of $290 million to $295 million. Wall Street had predicted $360 million. For the full year, Unity forecast revenue of $1.35 billion to $1.425 billion. But analysts were looking for $1.5 billion in sales for 2022, FactSet said.

Other companies considered metaverse stocks include Facebook parent Meta Platforms (FB), Microsoft (MSFT) and Nvidia (NVDA).

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

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