is it worth investing in roblox

Roblox is very popular with the world’s youth, making it an intriguing buy for investors. However, the company does face some unknowns that can affect stock value. Investing in stocks comes with some risk.

Full Answer

Is Roblox stock a good investment?

Since the Roblox IPO, the stock is up more than 60% and the company’s value is more than $40 billion. And now Wall Street analysts are pushing the interest even further after Stifel’s rating was released. In the long run, Roblox is looking more like a safe play for investors. But there are risks to consider. Roblox put together a strong 2020 which will unlikely be comparable to 2021.

Should you invest in Roblox stock right now?

Now, it should also be ... we have Roblox. As far as top growth stocks to consider in 2022 go, Roblox is a top stock many investors are looking at right now. Why? Well, Roblox is a key metaverse ...

Should you buy rblx stock?

Roblox Corporation finds support from accumulated volume at $73.90 and this level may hold a buying opportunity as an upwards reaction can be expected when the support is being tested. This stock has average movements during the day and with good trading volume, the risk is considered to be medium.

Is Roblox stock a buy?

The importance of bookings comes into play as the company sells virtual currency on its site that may be considered deferred revenue. Half of the 12 analysts who cover and rate Roblox consider the stock a buy, according to FactSet, while 3 rate it a hold and 1 calls it a sell.

Can you invest in Roblox stocks?

You can choose between buying Roblox stock outright or purchasing an ETF. An exchange-traded fund is a financial vehicle that contains a weighted basket of stocks in a sector or geography and can be traded much like you would an individual company's stock.

Is Roblox a Buy or Sell?

Roblox has received a consensus rating of Hold. The company's average rating score is 2.31, and is based on 7 buy ratings, 7 hold ratings, and 2 sell ratings.

How much will Roblox be worth?

However, investors shouldn't forget that Roblox's current pace of growth remains quite solid. Assuming the company maintains the $200 million revenue run rate that it has clocked in the first two months of 2022, it could end 2022 with $2.4 billion in revenue.

Is Roblox going to be profitable?

Roblox has never been profitable, but the company's Q4 net loss widened by a wide margin. In the quarter, revenue grew 83% YOY to $569 million, but the net loss grew 144% to $143 million. The company's free cash flow also declined compared to the year-ago period, from almost $119 million to $77 million in Q4 2021.

Why is Roblox stock up?

Potentially driving the rally was Roblox's estimate that revenue is estimated to be between $194 million and $197 million, up 28% to 30% year over year. Daily active users in May were 50.4 million, up 17% on an annual basis, while hours engaged rose by 10% from last May.

How does Roblox make money?

Roblox earns about 48.9% of Robux revenue as profit. The other 51% is divided between the game developer, the App Store, and payment processing fees. Roblox makes up 35% of its revenue via Robux purchases from Apple's App Store and 19% of its revenue via purchases from the Google Play store.

Will Roblox stock keep rising?

Opportunity. In the third-quarter, Roblox posted revenue growing by 102% year-on-year to $509.3 million. Investors should notice the strong bookings, which increased by a solid 28% Y/Y to $637.8 million. Chances are good that the business momentum will continue into the current fourth quarter and the year ahead.

Is Roblox a long term buy?

Roblox (NYSE: RBLX) recently released its February metrics report, and although it showed that bookings are down, one number that stood out was its daily active user growth of 28 percent year over year.

Will Roblox stocks recover?

A rebound in RBLX's shares is likely to happen in 2H 2022, when the company's bookings growth accelerate again benefiting from an easier base for comparison. But a recovery to the $70 price level is quite challenging considering the implied valuation multiples and the weakness in Roblox's US & Canada region.

Is Roblox losing money?

Roblox reported having 32.6 million daily active users at the end of 2020, up 85% from the year-ago period. Revenue jumped 82% in the year to $924 million. It had a net loss of $253 million in 2020, vs. a $71 million loss in the prior year, according to the Roblox IPO filing.

Is Roblox going to grow?

Roblox will continue to attract new users Founded in 2004, Roblox has more than 47.3 million daily active users (DAU), making it one of the most popular gaming platforms among the younger generation. While it was already growing nicely before COVID-19, the pandemic accelerated its growth, as DAU almost doubled in 2020.

Is Roblox popularity declining?

Roblox finished the quarter with about 588.5 million shares outstanding, compared with the year-ago quarter's 291.1 million outstanding shares. Revenue rose to $537.1 million from $387 million in the year-ago quarter, while bookings declined to $631.2 million from $652.3 million in the year-ago period.

What is a RBLX?

Rob lox ( RBLX) is an online gaming platform enabling users to play and create games in a variety of genres using the company’s own proprietary programming engine, the Roblox studio. The company generates most of its revenue through micro-payments using its native Robux currency, which users purchase with real money and then use to gain other ...

Is Roblox a good company?

Roblox’s first quarterly results as a publicly listed company were surprisingly good; so good in fact that RBLX share price jumped 20% – from $64 to $77 – the day that the results were announced. The company missed on its EPS expectations, but this was about the only negative thing to come out of it.

Is Roblox defending itself?

Roblox has vowed to defend itself – but history proves that even Google’s YouTube couldn’t fudge this issue, and the outcome, however it falls, is likely to be costly for the company. Free Stock Tools - Financhill. Close. Yes.

Is Roblox a reliant app?

Also problematic is the fact that Roblox is heavily reliant on app stores for the downloading of its platform – a model which is highly vulnerable to competition pressure and the future policies of the app stores themselves.

Is Roblox an immersive game?

Yes, other applications are the best at their own thing – YouTube for video streaming, Ste am for games distribution – but no-one is creating the immersive ecosystem that Roblox is building.

Is Roblox being sued?

But there are other, more tangible risks on the horizon. The first is that Roblox is being sued by the National Music Publishers’ Association. The NMPA alleges that Roblox illegally used its members music on the gaming platform, and in the process made “hundreds of millions of dollars” off of such use.

NYSE: RBLX

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The tween gaming platform remains a polarizing stock

Roblox ( RBLX -3.04% ) has been a volatile stock since its direct listing in March. The gaming company's stock started trading at $64.50 per share, far above its reference price of $45, and briefly topped $100 in June.

What does Roblox do?

Roblox's platform enables users to create simple games without any coding knowledge, share them with other users, monetize them with an in-game currency called Robux, and play other users' games.

How fast is Roblox growing?

Roblox was already popular with tween users prior to the pandemic, but stay-at-home measures caused its growth in revenue and bookings (the amount of money spent on Robux) to spike last year:

Roblox's core growth metrics are peaking

During the second quarter, Roblox's daily active users (DAUs) rose 29% year-over-year to 43.2 million, its average bookings per DAU (ABPDAU) grew slightly to $15.41, and its average hours engaged rose 13% to 9.7 billion. But on a sequential basis, Roblox's ABPDAU dipped as its average hours engaged stayed flat:

Can Roblox overcome the looming slowdown?

As Roblox's top-line growth decelerates, investors will likely scrutinize its widening losses and its overwhelming dependence on tween users.

Is Roblox's stock worth buying?

Roblox might eventually evolve into the YouTube of kid-created games, but its stock could remain volatile as it faces tough post-pandemic comparisons, concerns about its widening losses, and the risks regarding its dependence on tween creators and gamers.

How much is Roblox worth in 2020?

In its most recent funding round, Roblox was valued at $29.5 billion —seven times its value in its previous round in 2020. That said, whereas tech and gaming companies were rerated in 2020 as the COVID-19 pandemic fueled demand, there are concerns as to whether gaming demand will keep that pace.

What is Roblox's price to sales?

That came after a 56 percent rise in 2019. Based on its private market valuation of $29.5 billion, Roblox's 2020 price-to-sales multiple is 31.9x. If the company’s revenue rises 50 percent in 2021, its price-to-sales multiple would be 21.2x.

How many DAUs are there in Roblox 2020?

In its filing, Roblox said it had 32.6 million DAUs (daily active users) across 180 countries in 2020. On average, each user spends 2.6 hours daily on the platform. Its DAU count rose 85 percent in 2020, and 47 percent in 2019. Looking at the strong growth in online gaming and Roblox's strong position in the industry, ...

Why did Roblox delay its IPO?

Fintech company Affirm also delayed its listing to 2021. Usually, companies delay the IPO due to adverse market conditions and a tepid response from the market.

Will IPOs raise more money in 2021?

This could be a gamechanger for companies looking to raise capital, as well as for banks. Traditional IPOs are already seeing stiff competition from SPACs (special purpose acquisition companies), which have raised more money than traditional IPOs in 2021.

Can you pre-IPO on Roblox?

Since Roblox is listing directly, there won’t be any pre-IPO placement of shares. After the stock gets listed, you can place a market or limit order through your broker. Roblox's trading on its direct listing day will likely be similar to that of any other publicly traded stock.

Is Roblox going public in 2020?

While 2020 was a bumper year for U.S. IPOs, online gaming platform Roblox put off going public until this year and opted for a direct listing. The long-awaited listing has finally arrived this week, and Roblox is set to trade under the ticker symbol “RBLX.”.

How many people use Roblox?

Roblox currently has more than 30 million users and eight million developers. They all converge on an online social gaming platform where new games are created in a flash and spread amongst the users. Some games take off in popularity while others fall short of the mark.

When did Roblox go public?

Roblox (NYSE: RBLX) went public on March 10, 2021. In just short of a week, the gaming business was thriving on the market and grabbing a lot of attention in the process.

Is Roblox going public?

Nevertheless, Roblox has created a unique community of gamers and developers alike. And investors are ready to benefit from this innovative company now that it’s gone public.

Is Roblox safe to invest in?

In the long run, Roblox is looking more like a safe play for investors. But there are risks to consider. Roblox put together a strong 2020 which will unlikely be comparable to 2021. And as the platform continues to grow, issues will arise that may be a cause for concern.

Is Roblox stock upside?

However, it’s clear that Roblox stock has upside potential due to its innovative network. The platform provides a highly social environment for gamers and developers that has an entertainment value unlike anything else in the industry.

What is the lawsuit against Roblox?

Most of the lawsuits are among music publishers represented by the National Music Publishers’ Association (NMPA) for a minimum of $200 million in damages stemming from illegal use of music on its platform. NMPA CEO David Israelite stated:

When will Roblox release its results for 2021?

On May 10, 2021 , Roblox released its fiscal first-quarter 2021 results for the quarter ending March 2021. The Company reported an earnings-per-share (EPS) loss of (-$0.46) missing analyst estimates for (-$0.13), by (-$0.33). Revenues rose 139.5% year-over-year (YoY) to $387 million falling short of the $490.90 million consensus analyst estimates. April metrics saw DAUs up 37% YoY to 43.3 million. Hours engaged rose 18% YoY to 3.2 billion. Bookings were between $242 million to $245 million, up 59 to 61% YoY. Average bookings per DAU was between $5.59 to $5.66, up 16% to 17% YoY.