If you’re a gamer, then you’ve probably heard of Roblox. It probably isn’t as popular as Fortnite but it has whopping 100 million active players monthly.
Founded in 2004, the game creators David Baszucki and Erik Cassel had a mindset of connecting people through immersive 3D environments. Roblox can be compared to YouTube, in the sense that it thrives and relies heavily on independent content creators. Some might say that this is a positive thing as if/when the gamers get tired of ‘’gaming”, they can just stick to developing new games, thus keeping the online community alive and strong.
Roblox is not a single game, but rather a collection of over 50 million games created by its player community. Users download the Roblox application for computers, game consoles, smartphones, and tablets and use it to browse and play the Roblox game catalog. Its social features, such as the ability to add friends and chat with them while playing, are also important to its appeal. Roblox was officially launched in 2006 and has been steadily growing since then.
Although Roblox is free to play, some items within the game require users to make purchases, thereby spending real money.
Now, what if we told you that there’s a way to make back the money you spend within the game? No, we’re not talking about the developers’ fee that users get paid when they make a game within the platform. We’re talking stocks, investments, which quite frankly is easy money.
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What is Roblox Stock?
Roblox decided to go public in March 2020 which allows the general public to buy and own shares in the company on the New York Stock Exchange. This means that if the company keeps making money, should you choose to invest, then you also get the chance to earn as well.
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When Did Roblox Release Its IPO?
Roblox modified its documents to reschedule its IPO from Q4 of 2020 to February 2021, then filed another amendment, pushing the IPO date to March 10, 2021. Initially, they filed for a standard IPO but later chose a direct listing after DoorDash and Airbnb priced their IPOs below stock opening prices.
Roblox officially IPO’d March 10, 2021, with a price of $45 per share
Can I Invest In Robolox Stock?
Since its direct listing in March, Roblox has been a volatile stock. The stock of the gaming company began trading at $64.50 per share and briefly surpassed $100 in June. Roblox is now trading in the low $80s, but it remains a contentious stock. Some may be inclined to applaud Roblox’s popularity among tweens, its plans for international expansion, and its lack of meaningful competitors. However, it is important to note that the company’s losses are widening, the stock’s valuations are inflated, and Roblox faces difficult post-pandemic comparisons in the coming quarters.
Roblox may gradually turn into the YouTube of kid-created games, but its stock may remain risky as it faces difficult post-pandemic comparisons, concerns about its expanding losses, and dangers associated with its reliance on tween creators and gamers. It is probably best to observe before entering the market for purchasing Roblox stock.
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Although Roblox stock when public for about $64.50, its current price is $81.18. Roblox stock increased 54 percent on its first day of trading, closing at $69.50. Since then, the stock has risen by more than 24%. The stock has been relatively volatile, ranging from $60 to $83 in a short period.
How Much Could Roblox Grow In 5 Years?
According to Nasdaq analysts, Roblox revenue is expected to rise another 186% for the full year. However, they expect revenue to rise only 19 percent to $3.14 billion in fiscal 2022 as the pandemic ends and it faces difficult year-over-year comparisons.
Roblox’s net losses continue to grow as the cost of its cloud infrastructure rises. Last year, it also paid out more than a third of its revenue in “developer exchange fees”.
How To Buy Roblox Stock In 2021
If you have never bought stocks before, this guide will give you the tools you need to not only know how to buy Roblox stock but also how to go about buying/investing in stocks generally.
- Pick a brokerage: Some factors that you might want to consider before picking a brokerage are; commissions and fees, account types, and accessibility to additional market types. If you reside in the U.S, finding a brokerage won’t be too difficult, however, it is important to also consider if you would want to venture out into foreign markets or cryptocurrency to trade at a later point in time.
- Decide how many shares you want: Consider the price of Roblox stock’s current trading price then decide how many shares you want, or rather, how many share you have budgeted for. Because Roblox stock opted for direct listing as opposed to traditional IPO, shares will be sold at the rate that the market decides it’s worth.
- Decide on an order type: Once you’ve decided on the amount of Roblox stock you want to purchase, you can then place an order through your broker’s platform. The order type that you will have access to, depends on the broker that you open an account with. The different types of orders include but are not limited to; Market Order (payment goes through ASAP at the current trade price); Stop Order (Payment goes through at the current rate when the stock rises above a set price); Limit Order (Payment goes through when stock prices reach the limit specified by the buyer).
- Execute your trade: Now you can relax. As soon as your order is placed, your broker will fill in the order and make the purchase.
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What Other Gaming Stock Can I Invest In?
Though Nintendo is not as young and exciting as Roblox, the company has been home to the best-selling video game console in the world for the last three years. This massive customer base that Nintendo has amassed has resulted in significantly higher profits for the company. Because the company makes money not only from selling hardware but also from selling games, having a larger customer base means that game development is more profitable. Nintendo generated nearly $5.9 billion in operating profits in the fiscal year 2020, a 156 percent increase from the previous year.
Despite continued growth and improved profitability, some investors remain skeptical of the future of the company. Nintendo currently trades at an enterprise value to operating income ratio of less than 10, which is significantly lower than the market average of 24.5. Investors may be concerned about the cyclicality of the market.
Frequently Asked Questions (FAQs)
12-month price forecasts for Roblox Corp have a median target of $90 with a high estimate of $103 and a low estimate of $70
According to MarketBeat, Roblox has received a consensus rating of Buy. The company’s average rating score is 2.70 and is based on 8 buy ratings, 1 hold rating, and 1 sell rating.
Roblox stock can be found in the New York Stock Exchange as ‘RBLX’
Some of the alternatives are Intuit (INTU), Square (SQ), ServiceNow (NOW), and others.
The main thing that could cause a drop in Roblox stock, is a drastic drop in the daily usage of the game platform.
Conclusion
It is important to note that although this is a general overview of Roblox stock and the steps to take in making a purchase, you are in no way obligated to do so. Ensure that you do more in-depth research before deciding to buy Roblox stock. Investments of any form usually require a certain amount of risk and are not for the faint of heart, so make sure you’ve done a risk assessment and be confident in your decision before you buy Roblox stock.
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