Roblox (NYSE: RBLX), a leading online entertainment platform, has experienced significant growth over the past year and is poised for even greater success in the future. Although the stock is still down approximately 69% from its peak in November 2021, it remains an attractive investment option for long-term investors looking to capitalize on the next bull market.
Despite some uneven performance in recent years, Roblox has maintained its position as a top player in the metaverse space, which holds tremendous long-term potential. The platform offers thousands of games and social experiences, giving users the opportunity to create their own content and earn real-world cash. In the third quarter of 2023, Roblox set new engagement records, with average daily active users increasing by 20% to reach 70.2 million. This surge in user activity resulted in a 38% year-over-year revenue growth to $713.2 million.
Furthermore, Roblox is still in the early stages of tapping into its digital advertising business, which has the potential to become a major growth driver for the company. With its large and highly engaged user base, Roblox can leverage its platform for targeted advertising, offering advertisers a unique and immersive advertising experience.
Despite its recent success, Roblox stock remains undervalued, presenting an opportunity for investors to buy at a lower price. As the business continues to thrive and expand its revenue streams, the stock has the potential to deliver significant returns in the coming years.
Etsy: Poised for a Comeback in 2024
Etsy (NASDAQ: ETSY), the renowned online marketplace for handmade and vintage goods, has faced challenges in the e-commerce sector as consumer spending shifted towards services rather than goods. Consequently, Etsy’s stock has declined by 80% from its peak in 2021. However, there are positive signs that indicate a potential comeback for the company in 2024.
With the gradual normalization of consumer spending on goods and services, the gap between the two is expected to narrow. As the novelty of spending on travel and restaurants wears off, consumers are likely to resume purchasing goods, creating a more favorable environment for Etsy.
Moreover, active buyers and sellers on the Etsy platform have started to show signs of growth after experiencing declines in 2022. The return of user interest is evidenced by a 19% increase in active sellers, reaching 8.8 million in the third quarter. Additionally, active buyer growth was modest but still positive at 3.4%. These figures indicate that Etsy remains attractive to creators, providing a solid foundation for future growth.
Etsy is also expected to benefit from anticipated interest rate cuts, which would stimulate consumer spending and overall economic growth. Furthermore, the company’s profitability is evident, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increasing by 9% in the third quarter. Etsy’s robust EBITDA margin of 28.6% positions it to capitalize on any improvements in top-line growth.
Considering all these factors, Etsy stock is currently undervalued, trading at approximately 13 times EBITDA. As the company bounces back and demonstrates stronger performance, investors can expect the stock to experience a significant boost in 2024.
In conclusion, both Roblox and Etsy present promising investment opportunities for the future. Roblox’s dominance in the metaverse space and its potential for further revenue growth make it an attractive pick, while Etsy’s expected recovery in the e-commerce sector and its sound financial performance position it for a comeback. Investors should carefully consider these stocks as they navigate the ever-changing market landscape.