On Monday, shares of Roblox Corp (NYSE: RBLX) are down over 1.5 per cent in the early hours of trading after research by an investment banking company analyst reported an Underperform rating. As per the research, ‘high validation’ remained a key factor leading to ‘Underperform’. The USD 31 per share price target reflects a downside risk of over 30 per cent compared to Friday’s closing price.

Cautious about the overall Metaverse story, the research argued that Roblox is not better equipped to take advantage of it than many other existing companies. It further said that the current tech incumbents and content owners are informed of the potential power of the Metaverse. Roblox, therefore, is likely to face highly determined competition. Despite having some attractive characteristics, the business is more likely to be affected by these crucial factors- validation and metaverse competition.

Founded by David Baszucki and Erik Cassel in 2004, Roblox Corporation is a video game developer. Headquartered in San Mateo, the company has developed an online game platform Roblox which allows users to program games and play games created by other users.

On Friday, Roblox announced plans to debut ads next year. This becomes the company’s first significant effort to diversify its business beyond virtual goods in games. The company said that it is going to be testing ads with unspecified developers and brands by the end of this year.