Please ensure Javascript is enabled for purposes of website accessibility

Why Roblox Stock Suddenly Soared 10% This Morning

By Rich Smith - Updated May 21, 2021 at 11:07AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

WSJ's headline: Gamers gonna game.

What happened

Roblox Corporation (RBLX -0.69%) shares jumped 10.2% in Friday morning trading, 10:30 a.m. EDT -- and for a curious reason.

This morning, in an article titled "Pandemic Videogame Habits Might Be Hard to Break," The Wall Street Journal tried to make the case for investors returning to Activision Blizzard (ATVI 0.63%), Electronic Arts (EA -1.14%), and Take-Two Interactive Software (TTWO -1.30%). As the newspaper argued, "despite investor concerns, game habits formed during the pandemic could yet prove sticky," and the pandemic surge in stock prices in the videogaming sector could continue even after COVID-19 goes away.  

Videogamer in a deskchair with rockets flying into the air

Image source: Getty Images.

So what

So far, at least, that doesn't seem to be working out as you'd expect. This morning, shares of Take-Two and EA are both up mere fractions of 1%, while Activision Blizzard is actually down half a percent. But Roblox? Roblox stock is soaring.

While it's kind of surprising that the companies actually mentioned in WSJ's piece aren't getting any investor love today, it's not really a surprise that Roblox is going up -- because the Journal's arguments make sense.

More than a year of staying at home, working from home, and learning from home has certainly given rise to an increase in at-home videogaming. The Wall Street Journal notes that over the past year, net bookings at each of the three big videogame companies have surged about 30%.

Roblox's net booking jumped 161% last quarter alone.

Now what

This vast increase in gaming could be a hard habit to break after things get back to normal. Take-Two CEO Strauss Zelnick, for example, predicts that the market for video games "will be notably larger going forward than it was pre-pandemic," for the simple fact that more people have been introduced to (and maybe hooked on) video games over the past year.

Long story short, The Wall Street Journal didn't think to mention Roblox in its story on the huge interest in video games this morning. But seeing as Roblox is actually one of the fastest growers in the sector, maybe it should have.

Rich Smith owns shares of Roblox Corporation. The Motley Fool owns shares of and recommends Activision Blizzard and Take-Two Interactive. The Motley Fool recommends Electronic Arts and recommends the following options: long January 2023 $115 calls on Take-Two Interactive. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Roblox Corporation Stock Quote
Roblox Corporation
RBLX
$48.90 (-0.69%) $0.34
Electronic Arts Inc. Stock Quote
Electronic Arts Inc.
EA
$131.05 (-1.14%) $-1.51
Take-Two Interactive Software, Inc. Stock Quote
Take-Two Interactive Software, Inc.
TTWO
$125.51 (-1.30%) $-1.65
Activision Blizzard, Inc. Stock Quote
Activision Blizzard, Inc.
ATVI
$81.00 (0.63%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/09/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.