We recently compiled a list of the 5 Gaming Stocks That Are Solid Bets Despite Tariffs. In this article, we are going to take a look at where Roblox Corporation (NYSE:RBLX) stands against the other gaming stocks.
As Trump made his move regarding tariffs on multiple trade partners, many stocks with international exposure took a dive. Gaming stocks were also negatively impacted. We decided to take a look at some of the gaming stocks that traded down after the tariff announcement but continue to be solid investments.
The reason these stocks are not hugely impacted by tariffs is because of the nature of the business. Games developed by these companies have a huge fan following, which usually isn’t deterred by minor increases in price. Moreover, the digital nature of the products means enforcing tariffs isn’t as straightforward as it is on physical goods. On top of that, these companies sell to a global audience so tariffs even on a significantly big market base don’t impact the overall business as much.
To come up with our list of gaming stocks that are a good bet despite tariffs, we only considered stocks with a market cap of at least $5 billion.
A person taking lessons through Roblox Education, expanding their knowledge and skills.
Roblox Corporation (NYSE:RBLX)
Roblox Corporation is an online entertainment platform operator and developer. The company provides a range of products and services including Roblox Client, Roblox Studio, and Roblox Cloud. Roblox is more than just a gaming company though.
The popular platform also offers a massive community with healthy social interaction that can easily be monetized through selling accessories or holding community events. This strength is put to use when the company collaborates with retail companies.
The problem for investors is that the company isn’t yet profitable. The high valuation that the stock commands suggests investors are willing to ignore that. The cash flow could be the reason. Roblox more than doubled its operating cash flow in a year, which now stands at $247.4 million. On this metric, the company comfortably beats traditional giants like Electronic Arts (EA) and Take-Two Interactive (TTWO).
With both gaming and metaverse expected to grow at healthy rates in the next 5 years, Roblox is poised to benefit from the expanding market.
Overall RBLX ranks 2nd on our list of the gaming stocks that are solid bets despite tariffs. While we acknowledge the potential of RBLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as RBLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
