It has been a month since the popular thing called Roblox went public through its direct listing. The stock is still trading close to the level when it opened to trade for the first time on March 10. Right now, it is around $70 per stock when it was $45 for the first time. It means there is a chance for you to get a few dollars on the initial investment so far. So, what will Roblox IPO price be?
A steep market capitalization of $39 billion is one of the possible things that keep the stock stable. It is actually amazing for the business that has not reached a $1 billion revenue level yet. It has been known that buying stocks from a company in the early of their growth cycle is profitable. It is the reason why it is needed to [ay to research new IPO stocks, especially eyeing the one like Roblox that can grow fast.
Can you gain a lot by investing in Roblox? The possibility is high, knowing Roblox keeps rising day by day and it seems like it will not stop anytime soon. In order to understand more about it, it is better for you to know that it is Roblox first.
Roblox is excellent and everyone loves it. It is undoubtedly one of the most favorite things. People love this platform as it is good at blending the virtual experiences with the traditional social media features. As you probably know, it is like the hybrid social media and gaming platform. Apart from being a hybrid social media and gaming platform, Roblox has a potential to spread its wings to other things, such as business meetings and educational uses.
The popular gaming platform known as Robux started its story in 2004. This one is inspired by a few things, including toys, entertainment, and games, aside from social media. According to the company, it currently has an average of 37 million active users every day. It is really amazing because the number of the daily active users has doubled since 2018. The growth is even more wonderful to a rate of 85% in 2020 during the current COVID-19.
The ones that keep Roblox afloat is the community of developers and creators. There are currently 8 million of them. They are the ones who provide content for Roblox and the ones who turn Roblox into a more fun platform, not just a place to play games. The educational and social are the other things that keep getting popular. They range from remodeling the virtual homes to getting the experiences that stimulate heading to the school, based on the S-1 registration filing of the company.
The way Roblox makes money is similar to the one used by the companies related to the video game, which explains it has a great potential to grow into a huge platform that is beneficial for people. It has its own currency named Robux that is used to compensate developers and to monetize all the users who play the game. Each player is able to use the Robux by purchasing. When they have Robux, they can do tons of things in the game, including buying cosmetic items to be used by the avatar.
Roblox is expert in creating a range of free experiences to make the daily active users increase. Accessing the content on the platform is free, which is a good move to attract a large audience. The bigger the platform is, the more developers come to the platform, which means the content will be more varied. This one leads to the revenue and profits.
Since about three years ago, the Roblox revenue has multiplied to $923 million. Even though there are some net losses as it keeps investing in bringing more developers and more creators to make the platform better, it still resulted in the positive free cash flow of $411 million in 2020 and it has been free cash flow positive for the past three years.
So, what should be expected by the investors? It is true that investors are offered with a lot of growth by Roblox. However, you need to keep in mind that there is a possibility of the stock price and the business performance to follow separate tracks in the near term. It would be better for Roblox to see continued growth in the near term, even though the result might not be that great knowing the current pandemic. It is a must for the investors to consider the slowdown in momentum that has been expected in 2021 with a stock that has a high value.
As stated before, Roblox currently has a market capitalization of $39 billion. The number represents the price to bookings ratio of 18.5 based on guidance for this year. Some people think it is high, especially when the management is wanting to book to increase by just 6% to 13% this year.
In order to make the stock move to the higher level in the long term, Roblox must perform lots of revenue growth and in the end, free cash flow. The thing is, the management does not expect the business to get stronger until next year. That explains why the stock might remain the same in the near term until the investors get to know more about the long term growth trend.
While the near term will have slow growth, there is a high chance for Roblox to spread its wings for the next decade. For instance, the management thinks that Roblox is capable of offering tons of content that are able to attract the older ones, whereas as you know, it appeals to the children more now.
Some people actually believe that Roblox can do well in the long term. However, it is still needed for everyone to read the short term carefully and it is always better to start in a small position. Go seek professionals if you want to learn more.
On my daily job, I am a software engineer, programmer & computer technician. My passion is assembling PC hardware, studying Operating System and all things related to computers technology. I also love to make short films for YouTube as a producer. More at about me…