This Hot IPO is Breaking All the Rules

Mar 13, 2021

We’ve been patiently waiting for Roblox Corp. (RBLX) to make its NYSE debut, and on Wednesday, it delivered.

Big time.

RBLX shares surged more than 55% higher from the initial listing price, boosted further by news that the high-profile ETF ARK Next Generation (ARKW) purchased 500,000 shares.

I have a strong feeling this is a company we will be tracking for a long, long time… so let’s dive in.

Roblox is breaking ALL the rules.

At first blush, you’d simply think Roblox is a video game platform.

But I want you to forget Xbox and PlayStation… because Roblox is very different from traditional video game platforms in a number of ways.

  1. Organic game development.Unlike other video game platforms, which rely on big-budget developers to launch new games to their users, Roblox allows its users to create and develop games for the platform and be paid when the game does well.

    The result?

    More than 8 million active developers creating and contributing to a library of millions of games to choose from.

    2. Roblox games are “free” to play.

    Believe me, as a parent, I’m well aware of how much the new version of Xbox’s NBA Live costs. You buy and THEN you play, hoping the game is as good as advertised.

    But Roblox takes a different approach. Instead of trying to get the money up front, Roblox delivers value by letting its users play games (or “experiences,” as they call them) for free.

    Then, once the game has proven to be enjoyable, users can spend “Robux,” the platform’s in-game currency, to upgrade their experience via new items and permissions. And of course, Roblox is always ready to exchange real dollars for the currency they create.

    3. Roblox works on pretty much any device.

    The Roblox development and gaming platform works on Xbox, PC, Mac, Amazon devices, Apple devices, and Android devices.

    Developers can make a single version of their game and it “just works” anywhere, and users can take their experience from the Xbox to the iPhone seamlessly.

What does LikeFolio Data Say About Consumer Demand for Roblox?

Mentions of consumers (all ages) playing video games on Roblox’s unique platform have soared to impressive heights in the past year and are still trending +96% YoY on a 90-day moving average.

There’s no doubt that Roblox benefitted from the quarantines and shutdowns of 2020, as kids spent less time in school or on the ball field and more time on their gaming devices.

But as you can see from the consumer demand chart above, Roblox is not only holding on to that demand surge here in 2021, they are starting to see consumer demand creep up to new all-time highs.

Very impressive.

Playing RBLX From Here.

Recent IPOs are difficult to analyze for opportunity, especially when they have a volatile and impressive debut like Roblox.

We will continue to monitor the company’s performance, especially user engagement with the platform and its in-game currency, throughout 2021.

One thing is for certain… if a powerful investment opportunity opens up on this impressive young company, LikeFolio members will be the first to know.

Andy Swan,
Founder, LikeFolio