Roblox Stock Vs EA: The state of the video game industry has gone through some pretty substantial shifts over the last couple of decades. First, platforms moved away from focusing solely on consoles and pivoted to embrace computer gaming. Then, once smartphones emerged on the market, there was another pivot — this time to rope in mobile gaming.
As we enter the 2020s, console gaming, PC gaming, and mobile gaming are equally sizable markets (and, in the background, novel concepts like AR and VR gaming are on the rise).
One of the most notable games to dominate across all three platforms is Roblox, and one of the most recognizable developers across the three is EA. Both are titans, but which one is best to invest in?
What Is Roblox?
The best way to describe Roblox is to picture a mix between the character design and layout of LEGO figures and the open world sandbox style of Minecraft. Not only is Roblox a massive online gaming platform, it also serves as a place for amateur game designers to come and flex their skills with the Roblox Studio programming feature.
It hit PCs in 2006, mobile devices in 2012, and consoles in 2015, and has only continued to grow in size — Roblox currently has 165 million active monthly users and has been played by over half of all children under the age of 16 in the U.S.
Beyond this, what makes Roblox worth considering for investors and traders is the fact that it allows microtransactions with a virtual currency called “Robux,” which are purchased with real money in the app and spent on all sorts of items within the game.
Roblox Revenue Ranked #2 In App Store
Despite emerging nearly 15 years ago, Roblox only continues to grow in popularity — as a result, it’s currently enjoying its highest revenues ever.
Just the iOS version of the game alone passed $2 billion in total revenue back in October of 2020, making it the app with the second-highest revenue on Apple’s App Store.
Looking at the company’s latest numbers from the 2020 fiscal year, Roblox reported $924 million in total revenue, up over 81% from 2019’s total revenue of $508 million. Much of this is credited to the game’s popularity at the height of the COVID-19 pandemic, with many new users flocking to the game while quarantined at home.
Of course, this revenue means nothing if the company is swamped by debt. Luckily for Roblox, this isn’t the case at all. The look and mechanics of the game are decidedly low-rent, looking more or less the same as they did back in 2006, meaning that it doesn’t cost very much at all to keep up with the game. At the end of the day, it has a gross profit of $684 million.
Roblox Valuation Is Elevated
Even before this boom in popularity that blessed Roblox in 2020, the company has enjoyed a high valuation for several years now.
In 2017, it was valued at $1.1 billion. By 2018, that number had more than doubled to $2.5 billion. In 2020, it nearly doubled again to $4 billion.
Then, when Roblox went public on the New York Stock Exchange in March of 2021, it was valued at $38 billion dollars. Talk about taking a leap — Needless to say, this turned even the most unfamiliar heads toward Roblox.
But what about EA? Has Roblox stolen any of its thunder?
EA Is A Proven Leader
While Roblox looks like the latest and greatest thing on the market, longtime gaming developer Electronic Arts — more commonly stylized as EA — has been proving itself to be a leader in the industry far before Roblox even existed.
Founded in 1982 by an Apple employee, EA quickly grew from a minor computer game developer to one of the most instantly recognizable console game developers in the industry by the 1990s.
Responsible for such iconic game franchises as The Sims, Need for Speed, Battlefield, Mass Effect, Dead Space, and countless sports games such as FIFA and Madden, EA is far more than just one popular game — it’s a company that created a whole batch of them.
EA Valuation Vs Roblox Valuation
Currently, EA has a market cap of over $41 billion. While some view this as something of an undervaluation, there’s no denying the facts: this is under Roblox’s market cap of nearly $57 billion.
However, just as one could argue that EA is undervalued, it’s quite clear that Roblox very well could be overvalued.
With restrictions continually being lifted in the United States and more and more people returning to their “new normal,” it wouldn’t be at all surprising to see Roblox’s revenue dip back down toward the numbers it was bringing in back in 2018 and 2019.
Meanwhile, EA is pretty much here to stay. It might be valued less, but that doesn’t mean it’s less significant.
Is Roblox Stock A Good Buy?
According to the consensus among Wall Street analysts, Roblox is a good buy right now.
There’s no denying that Roblox is a hot commodity as of late, and that’s not going to change in the coming weeks or months (even if it might change significantly, years from now, when whatever the “next big thing” is for these kinds of cross-platform, massively multiplayer online games).
Roblox continues to grow more and more popular, which will bode well for investors and traders alike.
Roblox Vs EA Stock: Which Is Best?
When all is said and done, it’s hard to go wrong with either one of these stocks. Both are seeing great and continued success, even if one is much newer and one is much older. Ultimately, when determining which is the best to invest in for the long haul, the answer clearly seems to be EA.
Roblox’s success mirrors that of countless other online games that seemed to be at the top of the world, only to fall in popularity (like Fortnite, which appeared unstoppable until it suddenly wasn’t).
For this reason, EA seems best, even if Roblox is making more money right now. It’s hard to tell when things will take a turn for Roblox, but investors and traders won’t want to be around when it happens.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.