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Would Meta Platforms Buy Roblox?
And some thoughts on Cyber Monday and the omicron variant.

As Meta Platforms (NASDAQ:FB) (formerly Facebook) continues to invest in the metaverse, would acquiring Roblox (NYSE:RBLX) fit with its plans? Motley Fool analyst Asit Sharma tackles that question and weighs in on the results from Cyber Monday and the stock market uncertainty caused by the omicron variant.

https://www.fool.com/investing/2021/12/06/would-meta-platforms-buy-roblox/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article


(NTS: Transcript From a Dec 1st podcast, as noted in their final paragraph??)

(Use link for full article but RBLX portion copy and pasted below....)

Hill: Our email address is [e-mail]. Got a question from Bill Nielsen, who asked, "Is there a chance that Mark Zuckerberg would buy Roblox since it is one of the major players in the current level of metaverse? Roblox already has a lot of numbers and continues to add. It would provide an early place to reach people who are already involved with the concept and bringing them into his advanced level." There are a few places I want to go with this, but let's just start with the question as Bill laid it out there. Roblox is at the moment a $71 billion company. This would be a not-insignificant acquisition if, and I have to remind myself that it's the name of the company is now Meta Platforms. If Meta Platforms, formerly Facebook, were to make an acquisition of Roblox, it's a decent chance it's not going to be 71 billion, it's going to be closer to a 100 billion. But is that something that Meta Platforms shareholders should be hoping for?

Sharma: It's an intriguing question from the listener. I just want to make a quick comment here to your point, Chris, this would have to involve some combination of cash, stock since Roblox already is so big. Of course, Meta Platforms aka Facebook is near a trillion bucks in market capitalization. They could certainly trade enough stock to make the deal happen. It is hard to figure out what is in Mark Zuckerberg's mind. He has invested in the hardware component of this space for many years. He is pouring tens of billions of dollars more into this investment, hiring thousands of engineers globally to push also into the nonhardware or software aspect of this space. Facebook has communicated that they don't want to create the metaverse, and be the owner of a single space. I think they're just trying to allay fears that many of us have, and also keep the people who are always looking to break up big tech at bay by saying that, I think if eventually Facebook did have a dominant platform, which was the biggest expression of the metaverse, they would be quite happy with that. In some ways, Roblox already represents where Facebook wants to go. I remember Facebook had a few clumsy tweets after Mark Zuckerberg's big Metaverse presentation, where they were adding different retailers. What is your space going to look like in the metaverse? Funny, Roblox already has this.

One of the biggest brands on the planet, Nike (NYSE:NKE) is teaming up with Roblox. Roblox is essentially a gaming site that young kids who are typically between the ages of 6 and 16 goes to play games, and build worlds. But it also has this really amazing experiential aspect to it. People can go, and basically create their avatars, and have meetings in this space, attend concerts, do all kinds of fun things. Roblox's already the expression, fun expression of the metaverse that Facebook, I think would like to see itself creating. This is why the listener's question is so intriguing. Why don't they just buy Roblox? We know that Meta Platforms when it was Facebook was not averse to taking some big bets. Mark Zuckerberg put billions into Instagram and WhatsApp, and at the time, those acquisitions look really bold, an outsized, they make a lot of sense now to the business model. It wouldn't be unusual for Facebook to pour capital here. I just question whether Facebook really wants to swap a smaller competitor when it's got such a seemingly specific idea of what it wants to do. It's already signaled this huge investment over the next several years. I wish I could give a better answer. My gut feeling is that Meta Platforms just isn't interested in Roblox right now because it wants to create its own version of the metaverse. But if I were an executive on that team, what I would look at that as the possibly really keen strategic acquisition. I would, but I'm not on their management team.

Hill: Is Roblox attractive enough as a business? Even keeping in mind that it's a $71 billion company, is it attractive enough that someone could look to buy them? Or do you think by virtue of its size, that it would be a very safe bet that they're not going to get acquired? Because I know there are a lot of people who really love that business. There are shareholders who love being shareholders. Look, sometimes when you're the shareholder and the company is a little smaller, part of you is thinking, this is a great business. I hope it doesn't get acquired. I want it to run on its own. I'm wondering if Roblox shareholders can breathe easy knowing that the bigger that company gets, the less likely it is that an Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) or a Microsoft (NASDAQ:MSFT) comes in, and says, "Here's a check with more zeros than you can possibly imagine, and we'll be taken the keys to the car."

Sharma: If you're an investor, you're hoping that the few big companies that could pull off an acquisition of Roblox are looking in other directions. This is a company however, that at least it's going to attract some attention by potential buyers who want to extend their footprint in the metaverse space. We should say that companies like Microsoft themselves are already creating their own expressions of the metaverse, which are now a little business-to-business centric. Same could be said for Nvidia (NASDAQ:NVDA), the chipmaker. But here you have a consumer expression. The metrics are very interesting. Chris, average daily active users in quarter three for Roblox were 47 million people. They had an amazing number of hours of engagement, 11.2 billion hours of engagement on this platform, which increased almost 30% year over year in the third quarter. The numbers are there. This platform is widespread, it's ubiquitous. It's got a bigger and more engaged user base than many people realize who haven't looked at the business since it came public. There is something here for a savvy investor that believes they can take a free-cash-flow-positive company with really wonderful customer metrics that is drawing, attracting interest to the metaverse space and then take it to the next level. But I see your point though for Roblox shareholders, you hope that no one's paying attention.

Hill: Reminder that tomorrow, Dec. 1, is when Meta Platforms changes its ticker symbol. If you're a shareholder, today's the last day, you're going to see the letters FB in your portfolio tomorrow, Dec. 1, it becomes MVRS, so don't freak out when that happens. [Editor's note: Meta Platforms pushed backed changing the company's ticker symbol to 2022.] Asit Sharma, great talking to you. Thanks for being here.