If Kids Are Any Indication, $RBLX Should Be A Hit


Roblox is a cloud-based, free-to-play game, and game developer platform. They make money selling "Robux," an in game currency used to purchase items and improve characters. Players can use Roblox Studios, which is the company's proprietary developer engine, to create their own games which can then be played by other users within the Roblox ecosystem.

I'm not much of a gamer anymore so I'm just now hearing about Roblox as they prepare to be listed on the NYSE on March 10 ($RBLX). For sentiment I went to Reddit and what I read was overwhelmingly positive. Kid's are absolutely obsessed with this platform. They averaged 150M monthly users in 2020, which outpaced Minecraft's 126M.

What I think is most exciting about Roblox is that millions of games are developed using their engine every year, and most of them are developed by kids! They're customers are their own content creators, it's genius. Roblox incentivizes creators by offering premium payments, released last year which lets you earn "Robux" based on how engaging your games are.

Roblox Studio

For the twelve months ended September 30, 2020, over 960,000 developers and creators earned Robux on the Roblox Platform, of which there were over 1,050 developers and creators that earned $10,000 or more and nearly 250 developers and creators that earned $100,000 or more in Robux.

Roblox s-1

Robux can be exchanged for real money, at an exchange rate of 1 Robux = $0.35 USD. The caveat is that you have to be at least 13 years old, be a "Robux Premium" member, and have at least 100K Robux in your account. Last year developers on the platform raked in over $250M in revenues for the games they created!

As for the future, I see massive opportunities for growth in Asia, specifically China. Right now ~70% of Roblox revenues are generated in the US and Canada, with another ~17% coming from Europe. Asia-Pacific only accounts for ~7%, but this should be changing soon as they partnered with Tencent in 2019 and they released the Chinese version of Roblox recently. Tencent says they want to focus on the educational features that the platform offers to grow their presence in China.

Latest S-1 Financials:

I think it's worth pointing out that Roblox is sitting on a huge pile of cash. They had just over $800M in cash going into October last year, so it wouldn't be unreasonable to assume that figure is probably up over a billion now. It's going to be interesting to see what they do with that.

I'll probably let the dust settle once they go public on March 10 before considering taking a position, but from a zoomed out perspective, I love the potential with $RBLX.