Two video game companies hoping to play a major role in the planned Metaverse – Roblox (RBLX) and Unity software (tu) – Tuesday evening delivered disappointing results for the first quarter. Both Metaverse stocks fell on the news.
San Mateo, California-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 first-quarter revenue of $320.1 million. Wall Street had forecast a loss of 8 cents a share on revenue of $320.8 million.
Both companies are unprofitable and are currently in investment mode.
Metaverse stock decline
In today’s after-hours stock market trading, both Metaverse stocks fell. Roblox fell 3.5% to 22.38. Unity Software crashed 25% to 36. Both Metaverse stocks have fallen sharply this year.
Roblox shares hit a record high of 141.60 on Nov. 22. Unity shares hit an all-time high of 210 on Nov. 18.
According to IBD’s Stock Check, Roblox ranks 11th out of 22 stocks in IBD’s video game software industry group. It has a poor composite IBD rating of 11 out of 99. The composite rating assesses a stock’s key growth indicators relative to all other stocks, regardless of industry group.
Unity stocks 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’s Stock Check.
Create virtual worlds
With the video game inventory in the dumps, Roblox and Unity position themselves as providers of tools and services to create the metaverse. The Metaverse is a future version of the Internet with immersive 3D virtual worlds replacing static 2D websites.
Roblox saw healthy growth in the number of users and usage of its online video game and social platform in the March quarter. But bookings were down 3% year-on-year and missed estimates. In addition, he said that April bookings fell 8% to 10% year over year.
Roblox said it had 54.1 million average daily active users in the first quarter, up 28% from the same quarter last year. The total number of hours spent on the service was 11.8 billion, an increase of 22%.
Unity Software, which provides a platform for creating and serving interactive, real-time 3D content, missed landmarks with its second quarter and full year sales forecast.
For the current quarter, Unity forecasts revenue of $290 million to $295 million. Wall Street forecasted $360 million. For the full year, Unity forecasts revenue of $1.35 billion to $1.425 billion. But analysts were looking for $1.5 billion in revenue by 2022, FactSet said.
Other companies considered Metaverse stocks include Facebook’s parent company Metaplatforms (Facebook), Microsoft (MSFT) and Nvidia (NVDA).
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories about consumer technology, software, and semiconductor stocks.
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