Roblox Stock (NYSE: RBLX) is an excellent example of a high growth stock that has entered bear market territory recently. As the store has surpassed investors’ expectations since the company went public back in March, investors will closely monitor what happens next.
Roblox Stock turn out to be a massive winner in the long run as it is disrupting an industry and establishing itself as a leader among its peers. Investors looking for exposure to video games and social media should consider this platform, as well. This video outlines three reasons why Roblox stock has a shot at long-term success.
Video Games Are Changing the Way We Play
Using your everyday surroundings as an opportunity to gather investment ideas is possible sometimes. Many of my friends with children have mentioning their kids are obsessing with a new video game platform as Roblox over the past few months. They are not taking any interest in playing other games since their children cannot wait to get home and play. In addition to confirming the amount of money that these parents regularly give their children for in-game purchases, these parents also told how much money they spend on the games themselves. Once I learned why the company is unique and why the stock has heaps of long-term potential, it was apparent it was an excellent investment.
The Roblox gaming app is powered by user-generating content and is designing for kids. In essence, it is a 3D-generated universe where people can interact and play. The platform’s customers make all of the games on it. That’s what makes this company unique. This platform would enable its millions of users to share experiences. Another noteworthy aspect of the forum is that anyone, including children, can make a lot of money off it. The Roblox game, which is free to join, allows kids to acquire virtual currency, called Robux. Video games have never been playing in such a social way, which makes the stock particularly interesting.
The Roblox user base is rapidly expanding
Roblox is in value at a premium, but investors seem OK with that because the company’s user base is overgrowing. Roblox’s Q1 results showed that Average Daily Active Users (DAUs) grew 79% from the same period last year, with growth outside of the U.S. and Canada accounting for 87% of that. Roblox is still a massive hit with kids, even after many have there to school. It is important to investors since it indicates the company is attracting an international audience.
A company’s DAU illustrates how “sticky” its platform or service is for these types of businesses. Also noteworthy is the fact that working hours increased 98% in the quarter over last year. Moreover, the platform saw a rise of 111% in DAUs over the age of 13. Indicating that it attracts older users – a sign that the company has created something unique.
In the long term, Roblox trends remain unchanged
Roblox’s growth in a post-COVID environment was a big concern after it went public. The company’s Q1 earnings report suggests that those concerns have not materialized. It is still possible for this company to become a long-term winner if specific long-term trends continue. Gaming isn’t going anywhere soon, and the fact that Roblox allows people to interact with their friends, which makes the company so appealing to young people.
Roblox could be more accessible to more people around the world with the rise of 5G connectivity, as well. Finally, entertainment and social networks have become intertwined plays perfectly into this company’s business model. While the stock is certainly not cheap and the company has yet to report a profit, Roblox has all of the ingredients to become a long-term winner and is an outstanding stock to watch as we advance.