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Roblox Corp. plans an IPO amid a strong 2020 fueled by the COVID-19 pandemic, in which millions of tweens (children between 10 and 13) and teenagers use the platform on their phones and PCs on a daily basis. Is it worth to buy Roblox stock and the Roblox IPO?
The San Mateo, California-based gaming platform features a variety of “3D digital worlds” created by users and developers, offering virtual communities in which users can play with friends. Roblox (RBLX) admitted in its official filing with the Securities and Exchange Commission that 2020 saw a huge surge in users who were isolated at home during coronavirus protections. However, the company is also trying to appeal to a wider and older audience in order to keep growing when things get “normal” again.
Roblox originally filed for an IPO for 2020 on November 19, after the company announced a month earlier than it had begun initial preparatory processes. Roblox said in the original filing that the company is trying to raise up to $ 1 billion through the IPO; However, this number is usually a placeholder that will be updated in later submissions. Roblox expects to trade on the New York Stock Exchange under the ticker “RBLX”.
In the meantime, however, Roblox Corp has postponed its planned IPO until next year, as the company claims it is working with consultants to improve the process and cooperation with investors.
The following points should be considered when buying Roblox shares:
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How can you invest in Roblox stocks? The Roblox share investment is basically quite simple. It is best to use one of the numerous online brokers. It is generally very easy there to buy all kinds of stocks. However, Roblox shares are not yet publicly tradable as the IPO has not yet taken place. When the IPO is expected to take place in 2021 has not yet been determined.
It is advisable to pay particular attention to deposit insurance. If the broker files for bankruptcy, your own deposits and shares are retained thanks to the deposit protection. Our test winner TradeATF, for example, offers state-guaranteed deposit protection of up to 20,000 euros and 0% commission when buying shares.
The registration is done within a few minutes, and in most cases, you can start trading within a short period of time.
Before doing this, it is, of course, worthwhile to calmly evaluate the company because when investing, you should always analyse exactly where you are investing very hard-earned money. After the decision, you can place a buy order with most exchanges within a few clicks.
Stock selection and valuation can be very complicated. If you want it to be more accessible, we recommend a social trading platform. Here you just follow an experienced trader and automatically copy that trader’s trading decisions.
Our broker recommendation at this point is TradeATF. At TradeATF, valid EU regulation meets fair prices and a sophisticated platform. To register with TradeATF, click here.
If you have decided on a broker, you still have to log in with your data and verify your email address.
You can then first try out the demo account extensively and free of charge. This has a number of advantages. Then when you are ready to trade, you still need to complete a personal verification and deposit. To verify yourself, you need a valid ID and proof of residence (e.g. electricity bill) at TradeATF.
After registering, you need to decide how much money to invest in stocks. We generally recommend that you never invest more than 5% of your capital in a single share. So possible losses are manageable.
However, how much you want to invest in Roblox stock is entirely up to you. First of all, of course, you first have to add funds to your new TradeATF share account. To do this, simply click on “Add money” in this step.
TradeATF offers various payment options with which you can deposit money into your customer account. The most popular payment options are PayPal, credit card or bank transfer. It should be noted that a bank transfer usually takes 2-3 working days for the credit to reach the customer account. However, if you want to have your money in your account faster, there are other payment methods available.
Below is an overview of all the payment methods available at TradeATF:
| Payment option | Possible? |
| Buy Roblox shares with a credit card | ✔️ |
| Buy Roblox stock with PayPal | ✔️ |
| Buy Roblox Stock with Skrill | ✔️ |
| Buy Roblox shares with bank transfer | ✔️ |
| Buy Roblox shares with Neteller | ✔️ |
| Buy Roblox shares with UnionPay | ✔️ |
After the deposit, the money appears in your account under the menu item “Account”. All you have to do is search for the Roblox share using the search bar and select it. Then click on the “Trade” button.
A small window will open where you can set the price and the number of shares you want to buy. You can also set stop-loss and take-profit, i.e. at which price the share should be sold again in the event of a profit or loss. The two fields are optional.
The Leverage field allows you to control whether you want to buy the real share (x1 leverage) or a CFD (x2 or more leverage).
With a final click on “Place order “, the purchase is completed, and the share appears in your portfolio. Congratulations!
Roblox is a global gaming platform where millions of people gather every day to meet, create and exchange ideas in immersive, user-generated 3D worlds. The types of gameplay on Roblox are as limitless as the imagination of the developers themselves.
Members of the Roblox community created all online games on the Roblox platform for members of the Roblox community. Players can build the ultimate theme park, compete as a professional racing driver, play in a fashion show, become a superhero, or just design a dream house and hang out with friends. Roblox is free to download and play on modern smartphones, tablets, computers, Xbox One, Oculus Rift and HTC Vive.
If you haven’t heard of Roblox, you probably haven’t been with a teenager much in the past few years. The company said more than half of its 31.1 million daily users are under the age of 13. In 2018, the service reached around 12 million users every day. However, this value has now risen significantly, particularly due to the coronavirus pandemic.
However, the platform also allows the purchase of in-game extras. This is done using the Robux virtual currency. You can add accessories and clothing to your game character, get access to paid games, and pay for different types of power-ups.
While Roblox has not yet publicly discussed revenue, SensorTower is tracking monthly mobile spending. Players have spent more than $ 2 billion in total just on the mobile platform. Also, over $ 100 million has been. spent on the platform in some of the last few months.
In July of that year, Roblox announced more than 150 million active users per month on its platform, more than Roblox’s main competitor Minecraft, which announced around the same time that 126 million people were playing every month. According to Roblox, 75% of 9 to 12-year-olds in the US play on the platform. That’s an incredibly high number of younger audience users that the company is currently focusing on.
During the pandemic, children have come to Roblox as it has become a de facto virtual hangout. They have hosted birthday parties and many other types of in-game events that couldn’t be held in person. In July alone, users logged 3 billion hours to the website, a 100% increase from just a few months earlier. More than 37 billion hours have been played since 2008, according to Roblox. That corresponds to a playing time of over 100,000 years.
As I mentioned earlier, Roblox is not a video game itself but rather a platform for creating games. Unlike platforms that require code to develop, Legos-like blocks allow users to design and create their own virtual worlds and games. Once the games are ready, developers can instantly share them with people around the world.
The ease of use has resulted in notable games. Including the massively multiplayer game “Adopt Me!”. That focuses on the adoption and care of pets. Or “Jailbreak”, a game for police officers and robbers. Another popular game is “Welcome to Bloxburg”, a game based on The Sims. The platform is essentially limitless. This is just a small selection of the games that have been created. By 2018, more than 4 million developers brought more than 40 million experiences to life on their platform. The most popular games have over 10 million active monthly players.
Some games have even been played more than 1 billion times. Roblox helps keep its developers happy by offering easy-to-use developer tools and royalty-based compensation. In July, Roblox announced that the developer community had made more than $ 250 million in 2020, up from just $ 110 million in 2019. This is proof of how fast the platform is growing. Undoubtedly, the pandemic created a huge tailwind for the company, but games like this are played long after vaccination.
It even branched out recently from games with the idea of hosting live concerts. Lil Nas X recently performed two days and four shows in front of an audience of millions and played in a virtual world within the game. The shows were viewed together 33 million times. The company sees virtual concerts as a new way to give its players a chance to rest and keep the game relevant as many of their younger users get older. The success of the Lil Nas X concert bodes well for the future as Roblox can open up as a space for music.
The beta version of Roblox was originally created in 2004 by co-founders David Baszucki and Erik Cassel under the name DynaBlocks. Baszucki started testing the first demos that year. In 2005, the company changed its name to Roblox and officially launched on September 1, 2006. In March 2007, Roblox became COPPA compliant by adding a secure chat. However, this change limited the ability of users under the age of 13 to communicate by limiting them to selecting predefined messages from a menu. In August, Roblox applied server improvements and released a premium membership service called “Builders Club”. This paid membership feature was renamed Roblox Premium in September 2019.
In December 2011, Roblox hosted its first Hack Week, an annual event where Roblox developers work on ideas that represent new developments for the company. An iOS version of Roblox was released on December 11, 2012, and an Android version was released on July 16, 2014. On October 1st, 2013, Roblox published its Developer Exchange program with the developer “Robux”, which they have earned with their games, can be exchanged for real currencies.
A feature called Smooth Terrain was added on May 31, 2015, which increases the visual fidelity of the terrain and changes the physics engine from a block-oriented style to a smoother, more realistic style. On November 20th, Roblox launched on Xbox One with an initial selection of 15 games selected by Roblox staff. New Roblox games for the Xbox One must go through an approval process and are subject to the standards of the Entertainment Software Ratings Board.
In April 2016, Roblox launched – Roblox VR – for Oculus Rift. At the time of publication, more than ten million games were available in 3D. Around the same time, the “safe chat” feature was removed and replaced with a system based on a whitelist of a number of acceptable words for users under the age of 13 and a number of “blacklisted” words for other users. In June, the company launched a version compatible with Windows 10. While the gaming platform has been present on PC since 2004, when its web version was created, it was updated for the first time with a standalone launcher for Windows.
Throughout 2017, Roblox made a number of updates to its server technology as the technology they were working with up to that point was out of date and causing frequent outages. In February 2019, Roblox entered into a joint venture with Songhua River Investment Limited, a subsidiary of Tencent, to create a localised version of the platform. However, as of November 2020, the Chinese National Radio and Television Administration had not yet issued the license required to make Roblox available in China. In July 2020, Roblox announced the creation of a “Party Place” that will function as an online meeting place. The feature was created using new technology that was and has been used during the Bloxy Awards 2020Developed in response to the COVID-19 pandemic.
But Roblox also had to deal with criticism. Since most online accounts typically require users to be at least 13 years of age, the company has been criticised for having inappropriate content on its service. In the prospectus, Roblox said it used a human review team to review content and reviewed more than 68 million “assets” in the first nine months and that more than 9 million human customer queries were answered in 10 minutes. The company hopes to target older users in the future and keep current users as they grow up.
“Ultimately, we want to be a brand that meets all age groups,” said the company in its SEC filing. “An early indication of what’s possible: Our age group of 17- to 24-year-old users grew faster than our core group under 13 in the nine months ended September 30, 2020.”
COVID-19, in particular, caused an enormous increase in the number of users. When the pandemic broke out, Roblox’s growth exploded as tweens and others seeking protection flocked to the online community. Daily users increased 82% over the past 12 months, and the average user was on duty for more than two and a half hours a day.
In the first nine months of 2020, according to Roblox, DAUs, or average daily users, rose from 17.1 million in the same period of 2019 to 31.1 million. Year-over-year, Roblox reported 17.6 million DAUs in 2019, compared to 12 million in 2018. Similarly, total hours for Roblox more than doubled to 22.2 billion in the first nine months of 2020, compared to 10 billion in the same period of 2019. Year-over-year, users spent more than 13.7 billion hours on Roblox in 2019, up from just 9.4 billion in 2018.
The platform provider for games Roblox went public on March 10, 2021. Roblox offers users a platform on which they can develop their own games, which can then be played by other users.
At the New York Stock Exchange IPO, the starting price for a share of Roblox was $ 64.50, resulting in a market capitalisation of $ 38 billion.
The price of the Roblox share developed positively in the first week of trading and was today at $ 77.76 (03/17/2021). This compares to $ 64.50 on the day it went public. Thus, investors who invested in Roblox directly on the first day of trading were able to achieve a very good return in the first week of trading.
With a return of almost 21% since trading began, investors have already benefited from the stock’s good performance.
Growth, growth and more growth
In the past two years, the company has more than doubled its sales. In 2018, sales were $ 312.8 million, and in the first nine months of this year, the company had sales of $ 588.7 million. What’s even more impressive is that free cash flow increased from $ 34.9 million in 2018 to $ 292.6 million in the first nine months of 2020.
In the fourth quarter of 2018, the company had 13.7 million daily active users, almost tripling the number of players in less than two years. The more people use the service, the more it attracts users as new players often involve their friends in the games.
While much of the company’s growth during the pandemic was driven by teenagers and tweens with too much time, the platform has developed its own momentum. Rapper Lil Nas X recently gave his first online concert on the platform. The show, in which an avatar of the performer (who wore a motion capture suit) sang his hit Old Town Road and other songs, was viewed 33 million times. There was no fee for the concert, but concert-goers had to sign up with a Roblox account, and the company expects some of these people to be among the future new players.
The company has several ways to make money. Players can equip their avatars with clothing, accessories and “emotes”. Emotes are used to express a player’s emotions during a game. Emotes, in particular, are bought a lot on the company’s avatar marketplace. Users who earn Robux by selling games or in-game items can exchange their Robux for real money. However, the company charges a commission for every Robux transaction. With 36 million users per day, that adds up. The company said it also makes a small amount of money in advertising, licenses, and royalties.
As the most populous country in the world, China is also the largest online game market in the world. In 2019, through a partnership agreement with Tencent, the world’s largest online gaming company, Roblox had the opportunity to expand into China in the future. Although Roblox hasn’t started there yet. Roblox currently has a 51% majority stake in the partnership, and Songhua, a Tencent subsidiary, owns the rest. According to Roblox’s prospectus, Tencent plans to release a Chinese model of the Roblox platform.
While Roblox saw sales jump 68% in the first nine months of 2020, losses more than quadrupled during the reporting period. Roblox posted revenue of $ 588.7 million and a loss of $ 203.2 million for the period compared to $ 349.9 million in revenue and a loss of $ 46.3 million for the first nine months of the year 2019. Roblox posted revenue of $ 488.2 million and a lesser loss of $ 86 million in 2019, compared to revenue of $ 312.8 million and a loss of $ 97.2 million in 2018. The main culprits behind the growing loss in 2020 were content developer payments and administration fees related to the IPO. “Developer exchange fees are closely related to our overall booking performance as more users on the platform and Robux purchased by our users bring more Robux for developers and developers,” the company said in its submission. These fees increased 190% to $ 209.2 million in the first nine months of 2020 compared to the same period last year.
Over the same period, general and administrative fees increased 125% to $ 64.9 million. While $ 27.7 million of that increase was due to higher staff costs, including stock-based compensation expenses, the company also resulted in “an increase in the number of employees in our finance, accounting, human resources, IT and legal functions in connection with our anticipated public offering” at.
Roblox’s rise came about because many children are attached to their homeland in their free time. At the start of the pandemic, new users rose 40% in March. Once the pandemic is over and most children are returning to school, it is inevitable that the company’s user rate will drop. In the first nine months of the year, the company said user hours online rose 122%, and that trend is likely to slow. The company has already seen signs of this. Sensor Tower estimates Roblox’s best month this year was May when users worldwide spent $ 113 million. Since then, with some children learning in person in school again, the business has slowed slightly. In September, global spending fell to $ 94 million.
There is stiff competition out there as well, and as Roblox users get older, they may switch to other gaming platforms. So the company has to keep finding new users. The company’s competitors include heavyweights like Sony and Microsoft and Disney and Alphabet, who are just starting to ramp up their own cloud-based gaming endeavours, and these companies can easily outperform Roblox.
At this point, we compare Roblox with other companies in the industry. However, it should be mentioned that Roblox is most similar to Minecraft, which is a private company and therefore cannot be traded. So instead, we compare Roblox with other major providers in the gaming industry. The company could also be compared to cloud gaming providers such as Microsoft, Sony and Amazon.
Nintendo share
We compare the potential fees when buying Roblox shares from the largest brokers with the following example:
With these assumptions we now compare the fees of Libertex , TradeATF & Plus500 :
| Providers | Libertex | TradeATF | Plus500 |
| Deposit | for free | For free | for free |
| Purchase fees | € 2.20 | free | 3.08% |
| Holding fees | for free | free | 0.05% |
| Sales charges | € 2.20 | Spreads | 3.08% |
| Total fees | € 4.40 | Reasonable | € 92.32 |
For the purchase of Roblox shares, we recommend the broker TradeATF. At TradeATF, you can buy stocks free of commission and save yourself a lot of money. In addition, with TradeATF, you have a reputable broker who has many years of experience in stock trading and is also subject to strict regulations.
Investing in Roblox stocks is easy, thanks to the easy-to-use interface. Hence, if you want to invest in Roblox, TradeATF is the right broker for you.
With a strong year for tech IPOs, Roblox fits that category right. Millions of users are already heavily involved with the platform, and a huge ecosystem of developers should help Roblox continue to see robust growth.
I think there is enough catching up to do in gaming stocks for Roblox’s IPO to do well and to be a good investment. However, before we know the date of the Roblox IPO and the estimated market capitalization, I cannot unreservedly recommend the company. It should also be noted that cloud gaming is a rapidly evolving industry, and Roblox’s main teenage and tween demographics are notoriously volatile. The company may have increased its sales dramatically in 2020, but it has yet to show that this growth continues even after the coronavirus and that the company is able to generate profits.
Too much of the company’s growth has been sparked by the pandemic, and I am not sure how it can sustain its rate of growth if things return to normal. The company needs to prove that it can turn all these daily busy users into a profitable business, and it is still a long way from that.
According to experts and analysts, most of the signs point to Buy. Before we know the company’s issue price, however, we cannot predict whether Roblox shares will be worth buying.
Definitive! Gaming is a rapidly growing market and Roblox is perfectly positioned to take advantage of it.
Roblox has not yet completed its IPO and is therefore not yet listed on an index.
We generally recommend not investing more than 5% of the capital in a share. How much you invest in a particular stock is ultimately up to the investor. There is always a risk!
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