Roblox Shares Fall as Google and Unity Announce AI Game Creation Platform

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Roblox Corp (NYSE:RBLX) shares fell as much as 8% in pre-market trading on Wednesday and were recently down around 5% after Google (NASDAQ:GOOG) and Unity Software Inc (NYSE:U) announced a partnership to develop an artificial intelligence-powered game creation platform.

Google and Unity said they will develop an integrated platform featuring AI tools that allow users to create playable games without coding experience. The planned offering will operate in the user-generated gaming market, where Roblox also provides tools for creating and distributing interactive experiences.

Google has launched an experimental platform called Playground, which is available to users aged 18 and over. The platform enables users to generate and customise playable games using natural-language prompts.

Google and Unity Plan Unity Spark Launch

Google and Unity plan to introduce Unity Spark later this year. The product will be built on Playground and is expected to provide additional capabilities including advanced game mechanics, high-fidelity 3D features and access to the Unity runtime.

The platform will integrate with Google Play Games, providing features including leaderboards, multiplayer matchmaking and community functionality.

Publicly available games created through Playground will also include social features such as sharing and liking. Google said it plans to promote selected creator content across its network.

Unity provides development technology used to create games and other interactive content across mobile, PC, console and extended-reality platforms.

Jefferies Maintains $38 Roblox Price Target

Separately, Jefferies downgraded Roblox to Underperform from Hold on September 28 and maintained a $38 price target.

Analyst James Heaney said the approximately 30% increase in Roblox shares since its second-quarter results reflected expectations for bookings growth over the following 12 months that the firm considered too high.

At the time of the downgrade, Jefferies said its $38 target implied approximately 18% downside.

Roblox Corporation stock price