Roblox could rise 18% as it benefits from 2 ‘viral loops’ that should drive monetization, Steiffel says

• Steffel began coverage of Roblox on Monday with a rating and a target of $ 85 target, representing a potential 18%.
• Roblox has been approached with two “viral loops” that should drive engagement and monetization, Steiffel said.
• Steffel said Roblox’s vast and evolving ecosystem has a positive impact on the company for users and developers, as digital content creation continues to generate steam.
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Roblocks received its first Wall Street analyst coverage on Monday, with Stefel buying the online gaming platform online with a Buy 85 price target, representing a potential 18% business close to Monday.

Roblocks went public on the New York Stock Exchange earlier this month, and is currently valued at more than 40 40 billion. The stock is more than 60% above the direct listing reference price of $ 45 per share.

According to Steffel, his company plans to benefit from two “viral loops” that should strengthen Roblox’s network impact and drive higher engagement and monetization on the platform: content and social.

“The creation and use of digital content has emerged as one of the most popular forms of entertainment, well equipped for users and developers, the company with Roblox’s vast and growing ecosystem.”

Roblox currently has over 30 million users and 8 million developers coming to a social online social gaming platform where new games can be created quickly and blown away like wildfire.

“The model is the opposite of what anyone has faced,” Steffel said of Roblocks. “Roblox is a gaming platform that showcases tools for creating content, a social media platform, because the experiences on Roblox are very social, and the user-generated entertainment platform, including gaming, is an important component,” Steffel said.

In addition to the basic network impact in his model, Roblocks should also benefit from strong growth in the video game industry, which is poised to continue even after the Covid-19 epidemic, Steffel said.

But Roblocks faces a number of risks, including strong post-2020 difficult comparisons in 2021 and potential safety issues for younger users, Steffel published.

As per the note, it has taken its target of 85D price using 19 times multiple on its 2022 booking estimate.