Roblox trades under the stock ticker (NYSE: RBLX). The pandemic was a business killer for some industries. With the world going into a strict lockdown, many customer-facing businesses suffered, and the economy took a massive hit.
However, one sector made a killing: gaming and, to be specific, online gaming. And it continues to do so even after the world has opened back up.
The pandemic witnessed a 40% surge in the time spent on online games on mobile devices. One of the prime beneficiaries of this surge has been Roblox, which Roblox Corporation owns.
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Roblox (RBLX) Stock Introduction
Roblox is an online game platform and game creation system founded in 2004 and released in 2006. It is a system where players can play games created by other users. But it’s a platform amalgamating features of Second Life (Avatar creation, world exploration, and social networking) & Minecraft (world-building). In essence, it allows players to build their own games and game worlds, which are then hosted on the platform, serving as a hub connecting the game worlds.
Roblox is a free-to-use platform with in-app purchases. It’s mostly targeted towards children and tweens. It’s available on Windows, Xbox One, Android phones and iOS. What does this mean for a RBLX IPO and Roblox stock price?
How Does Roblox Make Money?
Roblox stock price would be nothing if it couldn’t make money. So, where does it get its money from? Well, it derives the bulk of its revenue from in-app purchases.
It takes 80% of the proceeds and passes the remaining 20% to the game developers—nice profit sharing for those working hard to create these games.
They have over 216 million active users as of 2024. It also sells premium membership to its developers with plans ranging from USD 4.99/month to USD 19.99/month.
A few of its popular games include Adopt Me (Pokemon clone), Jailbreak (Grand Theft Auto clone), and Murder Mystery 2 (Mafia/Werewolf clone), amongst others.
Roblox has grossed over USD 2 billion in lifetime revenue, most of which comes from the US and Great Britain.
The company had revenues of USD 335 million in 2018. In 2019, it claimed developer payouts of USD 110 million. With developers getting approximately 20% of revenue, this would roughly project Roblox revenue for 2019 of approximately USD 440 million, up 64% over 2018.
It has also projected its 2020 developer payout at USD 250 million, thus projecting its revenues of approximately USD 1 billion, more than double that of 2019.
Every year, revenue has increased, worth over 2 billion and climbing. Not bad for a kid’s game with basic graphics, huh?
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Roblox Stock Offerings
Did a RBLX IPO happen? Yes! Roblox allows users to create games using its own proprietary Roblox Studio. It claims that its developers create 20 million new games every year. This creates an element of never-ending discovery, ensuring its players continue visiting the platform, leading to a sticky customer base.
Roblox allows users to create, buy, and sell virtual items, from clothes and accessories for their avatars to weapons and even hot air balloons. Anyone can buy items. However, they can only be sold by administrator accounts and premium members. All transactions occur through an in-app currency called “Robux,” which can be exchanged for real-world currency through the website’s Developer Exchange System. The current rate of Robux is USD 318.65 for 100,000 Robux.
In addition, Roblox hosts virtual events and engages in the promotion of movies. The ongoing pandemic has led to the platform becoming hot for hosting virtual birthday parties and play dates. This has been accelerated by parents having to work full time from home and kids being cooped up the whole day. It’s forcing parents to find alternatives to keep kids busy and give us traders a Roblox stock price to trade.
Roblox Stock App
Roblox stock derives most of its revenue from in-app purchases, taking 80% of the proceeds. Then, the remaining 20% was passed to the developers of the games from which the purchase occurred.
The company had revenues of USD 335 million in 2018. In 2019, it claimed developer payouts of USD 110 million, with developers getting approximately 20% of revenue.
Roblox’s stock price will steadily increase in 2024. As will it’s users and revenue.
YouTube Growth Indicates Something
Final Thoughts: Roblox Stock
An RBLX IPO was a smart play. Online gaming has never been more popular. With the projected growth due to numerous social and economic factors, it’s something to think long and hard about if you’re looking for suggestions.
Some other good plays in the gaming industry are $ATVI, $NTDOY, and $EA, While it might be fun to invest in hype, the Bullish Bears are big fans of the charts. So look at Roblox stock price with the charts before buying and ensure you get a good entry. No one likes to buy something and have it drop for weeks shortly after, and while technical analysis isn’t the end-all-be-all for investors, it’s certainly nice to know a thing or two about a stock chart before you unthinkingly buy.
If you want to master the art of technical analysis, look no further than our free stock courses. Thanks for reading, and see you in the trade rooms!
Frequently Asked Questions
Yes, Roblox now trades on the stock market. You can trade it under the ticker $RBLX.
Roblox does not currently pay a dividend. If they continue to grow, maybe that will change.
There is no way to tell the future. However, analysts see $RBLX to $60 in the next 12 months, with a low of $31.
8 out of 15 analysts are rating RBLX “Strong Buy”. 3 out of 20 analysts rate the stock “Buy,” 3 out of 20 rate it “Hold,” 0 out of analysts rank it “Sell,” and 1 out of 6 analysts rank it “Strong Sell.”
This is due to Roblox’s unique business model which generates substantial cash flow in the early stages (mainly from the sale of the Roblox virtual currency), although revenue recognition takes place over a long period of time. This means that Roblox does not have a cash flow deficit and does not require outside capital to continue to grow.
