Roblox Stock: How to Invest in Roblox Stocks (+ Definitive Guide)

roblox-stock
roblox-stock

There are lots of gaming platforms on the market for people to play. Roblox stands out from the competition by giving its users the freedom to create and choose the game they want.

This opportunity has led to an increase in the number of active daily users on the platform, which has, in turn, led to the high performance of the Roblox stock.

Lots of investors got attracted to this stock during the pandemic because it recorded its highest level of performance.

However, as events, businesses and gatherings are slowly opening up, the situation is not the same anymore. Of course, the Roblox stock still performs quite well, but, investors are pulling out of what may be called the “Pandemic Investment Game”.

In this article, we will take you through a step-by-step guide on how to invest in Roblox stock but first, you need to know more about the company.

Let’s get started.

About Roblox

Roblox is a popular gaming platform amongst the youths. This platform offers its users the opportunity to create games about;

  • Theme parks
  • Car racing
  • Homebuilding and design
  • Superheros

In addition, they can create their own avatars, and chat with other users in the Roblox community.

The Roblox gaming platform sets itself apart from the competition by giving users the opportunity to create the game of their choice.

There are no age restrictions, which means that gamers of all ages can participate in creating a game of their choice. In fact, more than 50% of its users are under age 13. These users can also play the game that other users created.

Either way, the game creation is entirely up to the user. Roblox has more than 40 million daily users and was valued at $29.5 billion before going public.

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How Roblox Makes Money

The company generates revenue when its players buy Robux, an in-game currency that grants access to restricted areas on the platform. This currency can also be used to buy special gaming items or avatars.

In the first quarter, Roblox recorded an increase of 46% in average booking per daily active user yearly to $15.48.

This means that it’s not only adding millions of new users every day, it is also spending more money on average.

In the long run, management sees that the platform will be supported by both Robux transactions and advertising.

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About the Roblox Stock

Roblox became a publicly traded company on March 10, 2021, following a surge in its growth level during the COVID-19 Pandemic.

With children and family members spending more time at home, the gaming platform recorded a massive revenue increase of 82% that got to $924 million in 2020.

Roblox stock trades on the NYSE Market as (NYSE: RBLX) and has had series of large trading. Its first earning announcements as a public company came in on March 10 and investors were impressed with the results.

Currently, the Roblox stock is not cheap as it has increased up to 40% since it went public through a direct listing in March.

Its valuation looks more expensive with shares currently trading at 30 times sales. This figure is a lot higher than other top social media and video game stocks that sell for 10 times sales or even less.

Revenue for Roblox corp was up 127% year over year in the second quarter, and this figure was at a 68% increase.

Roblox stock began falling in mid-July after Benchmark analyst Mike Hickey initiated the coverage of the tech company at a price target of $75, as well as a sell rating on the stock.

Investors also sold their Roblox shares recently because to some of them, the company only seemed like a good investment during the pandemic because lots of people spent more time at home.

This means that as the US has opened up and some events and social gatherings have returned back to normal, some investors have pulled out from their pandemic-induced investments.

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Should you Buy the Roblox Stock?

The decision to buy the Roblox stock is one that you should make based on a variety of factors. Firstly, you should know that no investment is risk-free, hence you should be willing to invest only what you can afford to lose.

Next, there are some important questions you need to ask yourself before buying the Roblox stock. Becasue, at the end, it’s your hard earned money.

#1. Can you afford to Invest in Roblox stock?

As of the time of writing this article, the Roblox stock trades at $82.05 +0.18 (+0.22%) on the NYSE with a market cap of $47.191B and a volume of 4,725,728.

Is this something you can afford? And not just afford, something you can afford to lose?

#2. Do you want a long-term or short-term investment?

Roblox Investors invest in the stock because they believe that it is a fast-growing gaming platform with huge potential in the future. This means that RBLX is a good option for a long-term investment. However, it can also serve as a short-term investment too.

#3. Are there any Recommendations for Roblox Stock?

Find out if there are any stock/financial analysts that recommend the Roblox stock as a good option.

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#4. How does Roblox stock fit into your portfolio?

It’s important for you to know how the Roblox stock fits into your investment portfolio. Whether you are diversifying your investments or you are putting all your investments into one stock. Remember, diversifying your investments is a good way to reduce the risk of investments.

#5. Company Record

Before you decide to put your money in the Roblox stock, do proper research on the company. Check out its quarterly earnings since IPO as well as its market performance.

#6. What are the Stock details?

Find out information like the stock price, closing price, opening price, dividend yield, PE ratio, and lots more.

Getting the right answers to these questions can help you decide if buying the Roblox stock is a good idea or not. No investor likes to lose money, so be sure you do your thorough research before deciding.

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Is Roblox a good buy stock?

Roblox Corporation may be overvalued, according to valuation criteria. Given that it has a Value Score of F, value investors should avoid it. RBLX has the ability to outperform the market, as evidenced by its sound financial condition and growth prospects.

What is Roblox stock prediction?

A median target price of 35.00, a high estimate of 54.00, and a low estimate of 19.00 are among the 21 analysts that are providing 12-month price estimates for Roblox Corp. The median estimate reflects an increase of +2.97% over the most recent price of 33.99.

Why is Roblox stock so low?

The drop increased the stock of Roblox, which has already lost almost 60% of its value in the short term. It was brought on by growing Wall Street anxiety over its prospects for development in a weakening world economy.

Why is Roblox stock dropping?

The main issue affecting the stock is the drop in bookings. With a price-to-sales ratio of 10.6, the shares actually continue to appear costly. Before the business starts to see growth in bookings, the stock of Roblox is unlikely to recover.

Who owns the most Roblox stock?

The owner of Roblox? 18.99% Roblox insiders, 14.83% of retail investors, and 66.18% of institutional shareholders are the top three owners of Roblox (NYSE: RBLX). With 49.22 million shares or 8.19% of the firm, Index Ventures Growth Iii Jersey LP is the largest individual shareholder in Roblox.

Is Roblox a buy right now?

The hold is the general assessment of Roblox. The company has an average rating score of 2.17, based on 9 buy, 9 hold, and 5 sell recommendations.

Did Roblox stock crash?

After the gaming company disclosed first-quarter adjusted revenue that fell short of Wall Street expectations and a wider-than-expected net loss, Roblox stock started to decline. Bookings, a type of adjusted revenue, were reported at $631.2 million by Roblox (ticker: RBLX), a decrease of 3% from the first quarter of 2021.

How To Invest In Roblox Stock

Follow these steps duly to invest in the Roblox stock.

#1. Consider a good share trading platform

To buy the Roblox stock, it is important to search for the best brokers with low commissions, expert ratings, and the right investment tools to track your portfolio.

Whether it’s a brokerage firm or an online broker, ensure you choose one that fits you well and trades safely.

#2. Open your brokerage account

After you’ve decided which broker best suits you, you need to open a brokerage account.  It is similar to opening a bank account, and if it’s an online broker, the entire process is online. This saves you the hassle of using regular brokerage firms.

All you need to do is to provide basic bank information and you’re good to go. While some may open the account in minutes, others prefer to do a background check on you first. Unlike your regular bank account, your brokerage account will be used to store your shares.

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#3. Fund your broker

The next step is to transfer money to your broker for the purchase of the stock. You can decide to do a bank transfer or give them your credit/debit card. You can also deposit through electronic wallets like PayPal.

#4. Buy Your Stock

Now there’s a brokerage account to store the shares and money to buy the stock, you can go ahead to buy the Roblox stock. However, don’t buy recklessly.

Decide on the number of shares you want and contact your broker to do the trade for you. Most platforms will immediately email you a confirmation of your purchase.

Remember, the Roblox stock costs $82.05USD, so do your calculations correctly.

#5. Monitor your investment

Congratulations, you now own a part of Roblox. But, it doesn’t stop there. You have to monitor your investment. This means you have to be sure that you are using the right investment strategy to maximize your investment.

Track how your stock performs, including the business. Know when it’s time to acquire more or the sell-out. As your stock grows, you may earn voting rights on issues that directly affect your stock.

You can see our Investment guide for extra details on what to do and what to avoid when trading the Roblox stock.

READ MORE: Understanding Dividend Stocks and How to Invest

Conclusion

Since its IPO date on March 10, 2021, the Roblox stock has been known to have a good market performance.

Although it plunged sometime in mid-July, the gaming platform stock bounced back sometime in August.

Just follow this guide and you’d be on your way to maximizing your inverstment. Remember, it is a long and gradual process.

All the best!

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