Once a dominant player in the metaverse landscape, Roblox is bracing itself for a challenging 2024, with investors expressing doubts about the company’s ability to achieve long-term profitability.
Roblox, previously hailed as a metaverse hub in the world of gaming platforms, is gearing up for a tough year ahead as its financial situation continues to worsen, according to Sahil Alvi, the founder of Neuron Partners and an early supporter of Roblox.
In an interview with Fortune, Alvi didn’t mince words, highlighting that Roblox’s stock has been struggling for almost two years, and it appears that the company’s leadership hasn’t adapted to the changing market dynamics that no longer reward unchecked growth.
“While we’ve watched the stock languish for the better part of two years, it seems the leadership team hasn’t grasped the fact that the times have changed, and markets no longer reward growth for the sake of growth,” said Sahil Alvi.
Although Alvi didn’t disclose the extent of his firm’s investment in Roblox, he has openly called on Roblox’s CEO, David Baszucki, to consider taking the company private. In a LinkedIn post from late November, Alvi pointed out the challenges facing Roblox, emphasizing that the path to profitability remains unclear for the company.
“Perhaps taking Roblox private could be one of the solutions to stop the erosion of shareholder value in Roblox stock,” Alvi suggested.
Roblox has not issued any public response to Alvi’s open letter. However, the founder of Neuron Partners believes that 2024 will be a make-or-break year for the gaming company. He noted that the California-based firm has approximately $2.1 billion in liquidity remaining and urged the management team to take profitability seriously to avoid financial difficulties.
“2024 is a pivotal year when we’ll assess whether the management is steering the company toward sustainable profitability,” Alvi emphasized.
As of the latest information, RBLX shares are trading at $46.4, according to data from Google Finance. While the shares have seen a more than 66% increase year-to-date, they are still far from reaching their all-time high in November 2021, as well as from the initial IPO price of $70.
For more information, read: “Roblox Reportedly Encouraging Employees to Return to the Office, Despite Metaverse Focus.”