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Should you invest in Roblox stock right now?

By Kate Przylepa – Oct 6, 2021 at 10:55AM

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Have you ever heard of Roblox?

Kate: Let's talk about Roblox. (RBLX -8.09%)

Hi, my name is Kate, and I work at The Motley Fool.

If you're like me two years ago and weren't surrounded by kids in the age range of 6-15, you've probably never heard of this game. However, now that I have two kids in this age range, it's all that we talk about.

"Pepper, what are you playing?"

Pepper: "Roblox."

Kate: Roblox is an online game platform and game creation system developed by Roblox Corporation.

It allows users to program games and play games created by other users, like The Sims of my day, but a way bigger world.

You can play Roblox on most platforms. It's available on Microsoft Windows, Android, iPhones, Xbox One, macOS, and Fire OS. Now they have a ton of active users.

Their daily active users as of September 15th, 2021, are 48.5 million, hours engaged were 4 billion, with an estimated revenue of a 167 million to a 170 million, up to 98-102 percent year-over-year.

Maybe I should check how much time my kids are spending on the computer.

How does Roblox make money?

Roblox uses a freemium model for its users. While games are free to play, users can only access more advanced features and customizations by paying for them. Parents can load Robux into their child's account for in-game purchases. Once the currency has been used, then player's Robux accounts need to be reloaded. Users are able to set one-off payments, or they can set up a monthly subscription to fund the account.

Robux are a direct revenue stream for multiple parties involved. Roblox takes 48.9 percent of the money earned from that transaction, and the other 51 percent is split between the developer, app store, and payment processing fees. Roblox has a huge moat. Kids want to be online with their friends playing the same game, and game creators want to be where they have the biggest user base possible. The current price of Roblox stock, ticker RBLX, is $76.04 as of recording this video, with a market cap of 43.49 billion.

Now it will be interesting to see how Roblox will perform as more and more people get vaccinated and venture back out of their homes.

But in this moment in time, my kids need more Robux. 

Kate Przylepa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Roblox Corporation. The Motley Fool has a disclosure policy.

Stocks Mentioned

Roblox Stock Quote
Roblox
RBLX
$31.24 (-8.09%) $-2.75

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

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