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Roblox share price: Should you buy Roblox shares after the IPO?

Analysis of the Roblox share price

March 20, 2021 - Roblox's IPO


Since Roblox became a public company in March this year, you can now buy shares. As a result of its direct listing, it achieved a fantastic valuation of US $38 billion by the end of the week.


The company became one of the largest gaming companies in the world. Not bad for a 17-year-old loss-making company in a highly competitive market. Just a year ago, Roblox had a valuation of $4 billion. In just twelve months, its value increased ten-fold.


The pandemic was the catalyst for Roblox's success. Due to the general lockdown, children were trapped at home, so boredom drove them to online entertainment. In 2020, users grew rapidly.


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Roblox share price: What is it?


Based on the current Roblox RBLX share price of 71.98 USD, its current market capitalization is $39.62 billion. Roblox shares are trading $5 lower than their 52-week high and $8 higher than their yearly low.


What is Roblox?


The Roblox online gaming platform allows users to play games. One of the most popular gaming systems in the world.


Every day, 36 million users access the company's system. A majority of them are young users. Additionally, around 7 million developers and content creators contribute to the creation of new Roblox games. Over time, this helps improve, refresh, and update the Roblox experience.


Roblox's key feature is its digital currency - 'Robux' - which you can use to transact within the platform. To purchase items inside Roblox, you exchange real-world money, like USD or Pound Sterling, for Robux. This is also a way for developers to earn Robux.


Roblox's digital 'metaverse' is incredibly popular among children and young adults around the world. Last year, the British pocket money app, Roostermoney, surveyed how UK young adults spent their pocket money. What's at the top of your spending list? The Roblox game.


Roblox Share Price Forecast


Should you buy Roblox?


Roblox is considered a high-growth company. With its gaming platform, it is groundbreaking and improving all the time, and users around the world are flocking to its games.


Roblox's outlook is so bullish that Cathie Woods of Ark Next Generation ETF (ARKW) purchased 500,000 shares as soon as the company went public. What do you think? Should you join the crowd?


It's worth noting that Roblox shares aren't cheap. The company had revenue of $923 million and losses of $253 million last year. The company expects to earn $1.5 billion this year.


Will Roblox pay a dividend?


Since the company needs to reinvest all its resources into growing the business, there is no dividend.


One risk of investing in Roblox stocks now is that many economies, including the US and UK, are gradually opening up into the summer months. Due to the normalization of the global economy, young adults are likely to spend more time outside than in front of screens.


If you believe in Roblox's gaming platform in the long run, however, you should buy the stock on pullbacks. You get a better entry price this way. Another option is to buy ETFs that hold Roblox shares, such as ARKW.


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