According to Cowen, it’s too early to tell if Roblox is a meta version winner. Analyst Doug Creutz initiated coverage of the online gaming platform with an underperform rating, saying investors should sell the stock as it is currently overvalued. The stock is up more than 38% this quarter. “We consider Roblox to be a successful video game and entertainment platform with some attractive characteristics, but we believe that the current valuation is too aggressively influencing the metaverse future, which is likely still far away and may come in a way that leaves Roblox just one of many. players,” Creutz wrote in a Monday note. The firm’s $31 price target is about 31.9% below Friday’s closing price of $45.53 per share. Roblox fell 2.3% in premarket trading on Monday. Shares of Roblox, which made its public debut in a direct listing in March 2021, are down about 55% this year and 67% below their 52-week high after an initial pop during the pandemic, when kids spent more time online and stayed indoors. . Regardless, the analyst said Roblox faces several challenges to the metaverse future, citing a poor economy for content creators, the need to moderate content for a young audience, and the use of equity-based compensation that could encourage employee turnover. “In the near future, Roblox will need to prove that it is different from traditional video game companies by demonstrating superior user and revenue growth. In the long term, competition from large tech and entertainment companies is likely to intensify, and Roblox’s lack of IP-owned content may become a significant weakness.” reads the note.—CNBC’s Michael Bloom contributed to this report.