Meta Platforms (META 0.43%) launched Threads last month, but the company has set its sights on a big growth opportunity with the metaverse. The company has made it clear it's not backing away from that opportunity. It spends billions on its Reality Labs segment every quarter, and that's a trend that isn't ending anytime soon.
But there's a company that's already in much better shape when it comes to the metaverse, and that's Roblox (RBLX 1.35%). It may prove to be a big obstacle to Meta's future growth opportunities.
Roblox has millions of users and games
Horizon Worlds is an interactive online world that connects users. Meta sees it as being a key part of its metaverse. It's similar to Roblox in that users can create avatars and play games on the platform.
But with less than 200,000 monthly active users, it isn't doing a good job of drumming up interest. In an effort to change that, the company is going to focus on making more virtual reality games for the platform through Ouro Interactive, which is a game studio that Meta recently launched.
By comparison, Roblox has over 200 million monthly active users. And the genius behind it is that its users can easily create content and games themselves right on the platform. Kids can effectively make games designed for other kids, and creators can make money from the games, as well.
There are an incredible 40 million games on Roblox, and two-thirds of its users are under the age of 16. That gives the company a great advantage in not only being able to attract users, but also in having them create the content. And by attracting them early, it can help create brand loyalty early on.
The business still has growth potential
Reality Labs generated $276 million in revenue last quarter for the period ended June 30. But that was down 39% year over year. Without a popular platform to rely on, a lot of the company's revenue growth depends on the sale of its virtual reality headsets, which are used in Horizon Worlds.
While Roblox's growth rate has been slowing down, sales totaling $655.3 million were up a solid 22% through the first three months of the year -- far more impressive than Reality Labs' performance.
RBLX Revenue (Quarterly YoY Growth) data by YCharts.
There could be much more growth available for Roblox, considering its strong user base. The company has launched a partner program that will allow companies to advertise and create a brand presence within Roblox.
It's a significant opportunity that can lead to more sales growth and a path to profitability. For the first three months of the year, Roblox reported a net loss of $268.3 million, which still pales in comparison to the $4 billion loss that Reality Labs incurred over the same time frame.
Roblox is the better metaverse stock to own
Meta has an advantage by having a bigger pool of resources, but despite spending billions on developing Reality Labs and Horizon Worlds, it's still far behind Roblox in terms of popularity. And at this point, it may be too far behind to have a realistic chance of catching up.
For now, however, the companies don't appear to be direct rivals. On July 27, Meta announced that its Meta Quest 2 and Pro users can access Roblox from their headsets.
The metaverse is still in its early innings, but it's hard not to like Roblox as the better investment in the online realm. Its already massive user base and appeal to young people give it a sizable advantage that can make it a big winner in the long run.
By tapping into advertising and potentially leading to more explosive revenue growth in the future, the business could just be getting started. Roblox is not only the better metaverse stock, but it also may also be the better option for growth investors in the long run.
