Here’s Why Roblox Is a Screaming Buy for Long-Term Investors

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In this video I will be talking about Roblox (NYSE:RBLX), its earnings, and its move into China through a partnership with Tencent.

Earnings highlights 

Roblox reported a loss per share of 46 cents for the first quarter on revenue of $387 million, up 140% year over year. The company’s net loss for the quarter was $134.2 million. In the first quarter, daily active users, or DAUs, rose to 42.1 million, up 79% year over year, with 87% growth in DAUs outside of the U.S. and Canada and 111% growth in DAUs over the age of 13. Users spent 9.7 billion hours on the platform, up 98% year over year.

Streamer effect

The gaming industry has gained a lot of popularity in recent years, and popular games such as Activision‘s Warzone and Epic Games Fortnite stay at the top because of streamers who play the game. The same can be said about Roblox. YouTuber MeganPlays, who has more than 3.6 million subscribers on YouTube and more than a million followers on Roblox, has created her own game (with the help of Wonder Works Studios) called Overlook Bay. It launched in beta on July 27, 2020, and grossed over $1,500,000 in revenue in just four short months. Nothing is stopping streamers from leveraging their fame on social media and creating their own games.

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Roblox China

In 2019 Roblox and Tencent formed a strategic partnership to bring Roblox to China. Chinese regulators restrict access to online games in order to prevent youngsters from becoming addicted to them, but coding platforms with gaming features may be exceptions. That’s why the Chinese version of Roblox has an “edu” in the URL and calls itself Roblox Education. A coding program called K-12 STEM (science, technology, engineering, and math) is expected to draw some 40 million to 50 million users as part of efforts to advance science, technology, and innovation capabilities among Chinese nationals, according to Steven Ma, senior vice president of Tencent.

Make sure you watch the video below for my full insights. 

*Stock prices used were the closing prices of May 21, 2021. The video was published on May 23, 2021.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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