Folks hoping to grab a piece of the Roblox franchise earlier this month came up empty-handed. The company behind the fast-growing online community where members play, learn, and explore user-generated 3D digital worlds decided to delay its IPO last week. Now, it won't hit the market until 2021.
Roblox is an interesting platform with 31.1 million daily active users. More than 7 million developers are expanding and enhancing the experience. Business is booming. Revenue increased by 56% last year, and that growth accelerated to 68% through the first nine months of 2020.
The platform is unusual in that it's popular with very young users. A whopping 54% of its global audience is 13 years of age or younger. This has posed monetization and data-collecting challenges, but the potential is huge if those users stick to the platform as they get older.
However, if you're looking for a growth stock with strong appeal to the world's youngest citizens, you don't need to wait for the Roblox IPO. Bilibili (NASDAQ:BILI) should be able to scratch that itch right now.
A corporation so nice they named it twice
It's not just Roblox with an online platform that's proving magnetic to digitally connected youth. Bilibili has an even larger audience of mostly young Chinese fans of anime, comics, and gaming. More than 80% of Bilibili users at the time of its 2018 IPO were born between 1990 and 2009.
Bilibili may not be a household name in the U.S., but it's larger -- and, get this -- growing faster than Roblox. Revenue rose 64% last year, accelerating to grow by 71% through the first nine months of this year. Its top line soared 74% year over year in its latest quarter.
Bilbili's daily active users have risen 42% over the past year to hit 53.3 million. Its monthly active users grew even faster, climbing 54% to 197.2 million. It's also getting more of its users to pay for an enhanced experience. The number of monthly paying users has soared by 89% to 15 million. Roblox reported just 455,000 daily paying users through the first nine months of 2020.
There are naturally China-specific risks to buying into Bilibili, but it's not as if Roblox is a pure-play on this country's creative youth. Two-thirds of Roblox's daily active users now hail from outside of North America.
Neither company is profitable, and both are pumping a lot of money into growth. As rapidly as they are growing, costs and expenses have roughly doubled -- outpacing revenue gains -- at both companies in 2020.
There are some legitimate concerns about investing in a platform with such a young core audience. Will its fans grow out of it? Will their younger siblings find another nascent hub upon which to focus? However, growth is still growth. Roblox and Bilibili are expanding their reaches at a rapid clip, and their monetization efforts are improving with every passing quarter.
Right now, you don't have much of a choice. You can't buy the IPO of Roblox yet. You can buy Bilibili, and it has been one of this year's hottest stocks, more than quadrupling so far in 2020. Wait for Roblox to make its debut if you want, but you're missing out if you don't consider Bilibili as a larger and faster-growing investment option.