Best Metaverse Action: Nvidia vs. Roblox

Posted on Jan 5, 2022 at 10:27 am

Should investors choose the GPU giant or the young Metaverse platform?

Nvidia (NASDAQ: NVDA) and Roblox (NYSE: RBLX) play an important role in the metaverse. Nvidia dominates the market for graphics processors (GPU), an essential component for powering virtual worlds. Also to see: Johnson & Johnson (JNJ) Stocks Review: Expect Another Decline?. Roblox provides a creative platform that attracts creators and users who keep developing the metaverse.

Still, the question that arises for investors is whether the industry’s long-standing mainstay or emerging platform can better serve them, and the answer to that question requires a deeper look into both companies.

How can Nvidia stock benefit its investors?

Nvidia is an obvious choice for the Metaverse as the GPU maker has applied its graphics capabilities to artificial intelligence, data centers, and other applications in recent years. This might interest you: Crypto Tether USDT: where, how and why to buy tether?. Not only did this make Nvidia one of the top chip stocks, it also makes Nvidia chips ideal for supporting the Metaverse and its VR-based capabilities.

To this end, she announced an expansion of the Nvidia Omniverse in August. The Omniverse is a development and simulation platform that serves as the basis for the Metaverse. This will allow reviewers, artists and designers to work on software applications in real time and open the Metaverse to millions of additional users.

Additionally, according to Jon Peddie Research, Nvidia has an 83% share of the GPU market. That dominance means that Nvidia will take over the overwhelming majority of the Metaverse experiences.

The Metaverse and other innovations drive the top and bottom lines further. The company had revenue of $ 19.3 billion for the first three quarters of fiscal 2022, 65% more than in the same fiscal year 2021.

With the increase in sales and operating costs dramatically keeping pace with sales growth, Nvidia posted net income of more than $ 6.7 billion for the first nine months of fiscal 2022. Despite a significant increase in the tax burden, net profit increased 135% compared to the same period in 2022.

These successes enabled Nvidia shares to grow by around 130% over the past year. It does, however, support a price-to-earnings ratio (P / N) above 90, and its price-to-earnings ratio (P / V) of 31 is much higher than that of competitor AMD, which is 12 times the business . Nonetheless, the Metaverse’s potential probably contributed to this higher valuation, a factor that should be considered when valuing Nvidia stock.

What Roblox Stock Offers

Roblox advertises itself as the company that “stimulates the imagination”. Within its ecosystem, users create and share experiences in 3D environments created by themselves or by other users. This might interest you: Buying Veolia Stock: An investment in Veolia Environnement (EPA: VIE) three years ago would have given you an 80% profit.. Roblox is free to download and use on smartphones, tablets, game consoles and VR headsets like Metas Oculus Rift.

It is particularly popular with children, around half of the users are under 13 years of age. Additionally, games can be a source of income as Roblox pays developers a percentage of all income from a given environment.

It’s no surprise that usage spiked at the start of the pandemic, when schools closed and millions of children were stranded at home. Still, the Metaverse Society is more than just a pandemic campaign as the growth in Roblox users didn’t stop when the kids returned to class. In the third quarter, Roblox reported over 47 million Daily Active Users (DAUs), up 31% from the third quarter of 2020.

From then on, one can understand how Roblox generated sales of $ 1.35 billion in the first nine months of 2021. This is an increase of 120% over the first three quarters of 2020. However, costs and expenses continue to exceed income. This increased the loss of $ 348 million in the first three quarters of 2021 by 79% over the same period in 2020.

Investors should also remember that Roblox stock is in. was introduced Stock exchange March. It has grown 45% since then, although it has fallen nearly 30% from its November high as user monetization trends and slower DAC growth seemed to hurt the market.

Despite that drop, the P / S ratio is around 30. Although Roblox has become an expensive stock, it’s slightly cheaper than Unity software, which sells for around 40 times its revenue. Additionally, with triple-digit sales growth and a recent slump, Roblox could outperform the S&P 500 despite a high valuation.

Nvidia or Roblox?

While both Metaverse stocks are expected to continue generating massive sales growth, Nvidia will likely prove to be a better choice for most investors. Roblox’s huge losses pose risk to investors in the event of uncertainty. Like Roblox, Nvidia is showing signs of overvaluation, but its earnings and GPU leadership should protect investors regardless of the stock market environment.

This article represents the opinion of the author who may disagree with the “official” recommending position of a world class advisory service from the Motley Fool. We are Motley! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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Olivier Baron
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