What happened

Shares of Roblox (NYSE:RBLX) rocketed 50.1% in November, according to data from S&P Global Market Intelligence. This performance compared with the S&P 500 index's 0.8% decline last month. The catalysts for the gaming platform operator were its strong third-quarter results and investor excitement about its potential to be a big player in the metaverse, a highly immersive virtual world where people can interact.

Since the company went public in March via a direct listing on the New York Stock Exchange, shares are now up 63% from the opening price on the first trading day. The S&P 500 has returned 15% over this same period.

A virtual reality headset floating through space with the word Metaverse written on the front.

Image source: Getty Images.

So what

On Nov. 9, Roblox stock soared 42% following the company's release of its third-quarter results, which showed that revenue surged 102% year over year to $509.3 million. Growth in key engagement metrics was also robust: Revenue bookings increased 28% to $637.8 million, average daily active users (DAUs) jumped 31% to 47.3 million, and hours engaged rose 28% to 11.2 billion.

Results were better than these numbers suggest because the company had tough year-over-year comparables stemming from the pandemic. In the year-ago period, people stayed home much more than usual, driving a surge in video gaming.

Net loss was $74 million, or $0.13 per share, compared to a net loss of $48.6 million, or $0.26 per share, in the year-ago period. Despite posting an accounting loss, the company is making money from a cash standpoint. Operating cash flow edged down 2% year over year to $181.2 million and free cash flow increased 7% to $170.6 million.

Along with posting strong quarterly reports, Roblox stock has been getting a tailwind from investor optimism about the company's potential to be a beneficiary of growth in the nascent metaverse.

Now what

Wall Street is expecting Roblox's fourth-quarter revenue to rocket 152% year over year to $782.6 million, and its loss per share to widen 27% to $0.14.

With the company's powerful sales growth and potential to win as the metaverse takes off, its stock has the makings of a long-term winner.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.