Roblox and Unity: Which is a Better Buy?

Meta Platforms (FB) changed its name from Facebook and ignited a euphoria for metaverse stocks. In
hindsight, Roblox (RBLX) and Unity (U) are gaming companies. They are loosely metaverse. Markets
are no longer willing to pay a steep premium for either company.

With both stocks expensive, which is a better buy?

Roblox trades at a price/sales ratio of around 8 times. This is not far from Unity’s 9x multiple. Both firms
differ in their approach to growth and what they offer to investors.

Roblox is a playground for a young audience. The mobile platform is very popular and is still growing.
Usage remains strong. The stock market’s bearishness could hurt RBLX further. Buyers may not step in
until the market capitalization is lower. Investors could buy Electronic Arts (EA) or Take-Two (TTWO) at
better prices.

Unity has fundamental issues ahead. In the last quarter, the company blamed data corruption for its ad
platform. This hurt its revenue. The Unity engine is a powerful tool for developing games. However,
game designers are behind in releasing titles on the advanced platform. Unity cannot realize its potential
growth with such delays.

Investors are unwilling to wait for either firm to justify its valuation. Treat both stocks as equally risky.