While some believe that video game platform Roblox (NASDAQ:RBLX) is exploiting child labor, others believe it’s an opportunity maker and a way for kids to learn, grow, and even get paid. No matter what you believe, it’s doing pretty well these days, and a new ad sales deal sent shares up over 2% in Wednesday afternoon’s trading.
Roblox’s deal with PubMatic (NASDAQ:PUBM) gave it a new revenue stream and a way to sell a new line of ads. Already, Roblox offers some advertising, with built-in billboards and other surfaces in the game showing display advertising. The new version, meanwhile, will use video from a proprietary system that Roblox has been developing.
Those new ads are currently in testing but should be ready to go live by the end of this year. When they are ready, PubMatic will be in line to sell that new ad format to its own clients. Roblox, for its part, insists that the advertising will only display to players who are 13 or older.
Growing Number of Advertisers on Roblox
Granted, it would be easy to think that most 13-year-olds won’t bother stopping their gameplay to watch an ad. But there are a growing number of users who seem to think advertising on Roblox is a pretty good move. The British Broadcasting Corporation (BBC) has already had a presence on Roblox for some time now, with its Doctor Who and The Next Step properties already in play.
Now, they’re adding several more and bringing it all under the umbrella of BBC Wonder Chase. Even restaurants are getting involved; Wow Bao recently rolled out the Dim Sum Palace, a “virtual dance club” complete with the potential to win free food via an online scavenger hunt.
Is Roblox Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on RBLX stock based on 12 Buys, five Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 13.17% loss in its share price over the past year, the average RBLX price target of $49.72 per share implies 24.11% upside potential.
