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Investing in Gaming Stocks: Roblox


by Analytics Insight
January 12, 2022

Roblox now ends up with a market cap of US $ 35.5 billion

After a decade and a half online, Roblox made its public debut on Wednesday March 10, 2021, which went very well for the company. In January, the company was valued at $ 29.5 billion, but after shares were pushed to $ 64.50 apiece, Roblox now finds itself with a market cap of $ 35.5 billion.

While that might sound like a bunch of business jargon to most of us, it’s clear that it did one thing for the business: made them a lot more valuable. This is because Roblox revenue jumped 82% last year to $ 923.9 million.

So all of this raises a fairly large and complex question: is it wise to invest in gaming stocks? Well, let’s take a closer look.

[It’s worth noting now that this is not at all financial advice. Ensure that you do your own research and make your own informed decision before investing any capital in any brand.]

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To put the value of Roblox as a whole in perspective: Game companies like Zynga, Electronic Arts, and Playtika all have values ​​in the billions, while software developer Unity is close to rivaling Roblox. While that’s no surprise, after all, Roblox has been booming for over 15 years as a single IP, it shows that their stocks don’t promise a rapid boom, they promise longevity, sustainability, and measured growth.

Plus, with Roblox recently announcing a bunch of upcoming features that hope to attract a more adult audience, the company aims to continue pushing the boundaries.

But wait a moment: let’s take a step back, what is Roblox really?

Build Roblox

Roblox is the brainchild of David Baszucki and Erik Cassel who started working on the project in 2004, releasing it on PC in 2006. While there are many facets to Roblox, from character customization to the iconic sound effect “Oof”, its heart is like an online games platform and game creation system, allowing you to create and play, well, just about anything!

The game has always run for free, with a number of in-game purchases being peddled through a purchasable virtual currency called Robux. It has traditionally attracted a younger audience, with more than half of its 164 million users (as of August 2020) being under the age of 16.

The interesting thing about Roblox is that it wasn’t an overnight success. In fact, for most of its history, the game was relatively small, both in player numbers and as a business. This is largely attributed to David Baszucki’s lack of interest in media coverage and lost gaming among a number of similar platforms released around the same time, perhaps more specifically mistaken for Minecraft in its early days.

It wasn’t until the 2010s, and the second half of them at that point, that Roblox entered the limelight, which was accentuated by the COVID-19 pandemic, which has saw a rapid increase in the number of players.

This increased player base throughout 2020 saw Roblox’s valuation skyrocket from $ 4 billion in February 2020 to $ 29.5 billion in January 2021.

The fact that Roblox has decided to go public (release its shares upon purchase) is a strong indicator that they have big plans for the future to continue building and expanding the platform. Expansions, if done well, should be a great return on investment for those who have bought stocks.

Now, let’s get to the real question: Is investing in gaming stocks a good idea?

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[Another reminder that you should not take this as financial advice, just an opinion].

Overall, the gaming industry is a very attractive market in which to invest. By ‘gaming industry’ we group together everything from esports and game enablers to game technology developers and manufacturers. In 2012, the global gaming market had a turnover of US $ 70.6 billion. This has almost doubled in 6 years, with 2018 turnover amounting to US $ 137.9 billion. For the future, 2021 hopes to continue this trend with a provide of 180.1 billion US dollars.

This means that, on average, the gaming industry has experienced a compound annual growth of 11%, making its growth 4 times greater than that of the US economy en masse.

While this may seem like an indicator to invest immediately, it is important to remember that gaming stocks are quite risky. Like most forms of entertainment, especially those that rely on technological innovation, gambling is incredibly high risk, which means if your investments fall into the wrong company you are in big trouble.

Take Atari, Yahoo or Blockbuster, all of which collapsed despite the prosperity of their surrounding industries.

Not only that, but gaming stocks are also very volatile if the markets change. For example, in 2018 various game titles plummeted by around 50% as Battle Royale titles exploded onto the scene and left competitors in disarray.

Of course, this volatility means you can win big, but it can also mean that you could lose everything in the blink of an eye if a company makes the wrong choice or fails to keep up with market trends. And because industry volatility is hard to predict – after all, no one knows what the next big trend will be – it’s incredibly difficult for game companies to sustain continued growth.

For these reasons, the safest way to invest in video game stocks is to go ahead with an ETF (Exchange Traded Fund) which helps build a diversified portfolio of stocks that can generate growth. more durable than putting all your eggs. in a basket.

TLDR; Video game stocks are volatile properties, which means that you could gain or lose a lot of time if you invest in them. Established companies, like Roblox, going public can be tempting to investors, but putting all your eggs in one basket puts yourself at great risk. Gaming ETFs provide a great way to invest in the rapidly growing and growing gaming industry without hedging your bets on a single developer or IP, making investing an attractive possibility for many.

If you have a favorite game you are thinking of investing in, why not do it right away? Head to Eldorado to purchase virtual currency and other goods for any major online game, from OSRS and Escape from Tarkovat Warframe.

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