Shares of Roblox Corp (NYSE:RBLX) started Thursday with a steep decline, giving up gains recorded in the previous trading session.
While Roblox offered a unique and compelling value proposition to customers, there were concerns around its ability to gain "more lucrative audiences," according to Oppenheimer.
The Roblox Analyst: Martin Yang initiated coverage of Roblox with a Perform rating.
The Roblox Thesis: Much of the company's research and development efforts were still in "the very early stages of delivering their full potential," Yang said in the initiation note.
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"Whereas most game publishers compete to make unique first-party content, Roblox "delegates" content differentiation to third-party developers," the analyst wrote. "Game developers make less than 25 cents on a dollar generated from the Roblox platform, compared to 70-85 cents from mainstream gaming platforms," he added.
"While we believe RBLX has the potential to accelerate revenue growth and expand margin, we are not yet convinced on the timing and magnitude," Yang further stated.
RBLX Price Action: Shares of Roblox had declined by 0.70% to $35.45 at the time of publication Thursday.
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Photo: Courtesy Roblox