Pros and Cons of Investing in Roblox

PHOTO CREDIT: Roblox

OVERVIEW

PROS:

  1. The Delta variant will also benefit the company. As school districts shut down and go back to a virtual learning method, Roblox will see an increase in customer engagement on its platform as parents continue to try to entertain their kids during these tough times. This will also benefit investors in the company.
  2. Roblox has been expanding in many international markets over the past couple of years, especially in Asia. The company has opened its platform to customers in countries like Japan, China (through its subsidiary Luobo), and many others. This international growth will further drive growth for the company and will benefit investors as well.
  3. Roblox, unlike other gaming companies, only operates the gaming platform where other developers and users design 3D experiences for its users. Roblox sells Robux, the digital in-game currently that can be used at these different experiences. This unique business model might benefit the company to turn profits in the future.

CONS:

  1. COVID-19 reopenings might hurt engagement on the company’s platform as kids return to in-person school and other extracurricular activities. This will lower the time that kids spend on the company’s gaming platform, something that might hurt the company and its investors in the short to mid-term.
  2. Roblox has an expensive stock price. It currently trades at over 80 dollars per stock. However, the company still has to report a profitable quarter since its IPO a couple of months ago. If the company can not turn a profit soon, it would continue to make the company’s stock volatile and might hurt investors during short-term trading.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.