The gaming industry is a large, fast-growing sector with significant long-term expansion potential. Want to be part of that growth? Consider investing in Roblox. This guide will analyze the most important facts about the gaming platform, as well as explain how to buy Roblox stock. In addition, we will go through the risks involved in trading the stock and provide you with an overview of the best brokers to use.
What is Roblox?
The company generates revenue through selling the virtual currency Robux to its users, which can be used to purchase virtual items (such as clothing, accessories, and emotes for avatars) sold by the developer and creator community on the platform.
The COVID-19 pandemic led to substantial growth in both the platform’s revenue and user numbers, in line with similar developments encountered by the gaming industry as a whole, as people were forced to remain indoors due to lockdowns and spent more time playing video games.
Notably, Roblox made $1.9 billion in revenue in 2021, a 107% increase from the previous year. In Q3 2022, the total revenue generated stood at over $517.7 million, down from the last quarter’s revenue peak of $591 million.
As of Q3 2022, Roblox has over 58.6 million daily active users, increasing fourfold between 2018 and 2022. The most significant gains can be seen from Q1 2020 to Q1 2021, where the user count almost doubled due to the social-distancing measures implemented in response to the worldwide coronavirus pandemic.
However, although daily users are growing, the Roblox November 2022 metrics report noted a decline in estimated revenues and bookings per daily active user, indicating slowing growth in Roblox stock price.
Roblox IPO: when did the company go public?
Roblox IPO went public in March 2021 after a fierce year of growth, bolstered by social distancing restrictions triggered by the pandemic. The company forsook the traditional IPO process, opting to list its stock directly by allowing existing shareholders to sell shares straight to the open market.
The shares began trading at $64.50, giving the gaming platform a market gap of $35.5 billion. However, since going public (as of November 2022), the RBLX share price has shed nearly 60% of its value as markets turned overwhelmingly bearish.
The Roblox stock symbol is RBLX, and it trades on the NYSE exchange. You can acquire Roblox stock via multiple brokers, which we will overview later in this guide.
Step-by-step process on how to buy Roblox stock
Roblox is a publicly traded company, meaning you can buy Roblox stock through a broker. The steps involved in purchasing RBLX shares are outlined in the following section in detail.
Step 1: Choose a broker
To buy Roblox stock online, you’ll need a brokerage account. Several platforms are available, but the right one will depend on your investment style (long-term buy-and-hold strategy or active day trading) and needs (e.g., whether you want to trade more advanced financial products such as options). When evaluating brokers, consider the following features:
- Fees: Brokerage fees is a type of fee collected by brokers to execute your transactions or provide specialized services. However, today, the vast majority of online brokers offer commission-free stock and exchange-traded funds (ETF) trading;
- Security: Pick a reliable broker by ensuring it is fully licensed by state regulatory authorities as well as FINRA and registered with the Securities and Exchange Commission (SEC);
- Trading tools: Active traders may want more out of their brokerage accounts. Some brokers offer fully customizable platforms with comprehensive analysis tools or access to additional data for an extra cost. If such additions are unnecessary for your purposes, avoid paying extra for them. It’s usually a good idea to look for an easy-to-use platform with a competitive fee structure if you are new to stock trading. A dedicated section with investing tips and tricks is a bonus;
- Access to market data: You should search for a platform that gives you access to solid market research and reporting tools to help you trade confidently with updated data;
- Fractional stock trading: Fractional shares allow investors to buy stock or ETFs by the dollar amount instead of the number of shares; particularly helpful for investors who don’t have limited capital but want to build a diversified portfolio or are looking to set up a dollar-cost averaging strategy.
Also, traders can opt for online, full-service brokers or discount brokers, as well as robo-advisors.
Roblox stock: where to buy?
Access to the financial markets is easy and inexpensive, thanks to various online brokers. However, choosing the right broker optimized for your needs (investing goals, educational tools, trading style) is paramount for a successful trading experience.
To securely invest in Roblox and buy RBLX stock, consider these brokers:
- Commission-free stock trading;
- 2,000+ stocks from 17 exchanges;
- Fractional shares available;
- User-friendly platform.
Intermediate Traders and Investors
- Commission-free stock trading;
- Global stock-trading on 90+ market centers;
- Fractional shares available;
- Extra income on fully paid shares;
- Lowest financing rates for margin accounts in the industry;
- No account minimum.
Low cost investing
Step 2: Fund your account
Once you have selected a broker, the next step is funding your trading account. Remember, it can sometimes take up to three days for the funds to be deposited.
Step 3: Research the company
When investing your money in the market, doing your research is crucial. If you want to buy RBLX stock, keep an eye out for the current Roblox stock price, as well as past price data, overall valuation, and company announcements regarding new launches or relevant news stories.
The best place to start your research on a stock is to go through its public filings with the SEC. Conveniently, Roblox’s quarterly earning reports (form 10-Q), SEC filings, and letters to shareholders, as well as recent press releases, can be accessed directly on its website from its investor relations section.
Step 4: Decide how much you want to invest
After you’ve done your research and determined that Roblox stock is the right choice for you, you’ll need to decide how much you want to invest.
The amount of money you invest ultimately depends on the price and number of shares you want to buy. If the share prices of stocks you’re interested in are financially out of reach, you can also explore fractional shares. Fractional shares allow you to purchase a portion of a stock instead of the full share.
Because investing can have unpredictable returns, it’s crucial only to invest what you can afford to lose and to be mindful of your risk appetite.
Step 5: Place your order and buy Roblox stock
Once you decide on the number of shares or the dollar amount you’d like to purchase, you can place your order. If you’re working with an advisor, tell them you’d like to buy Roblox stock and how much you can invest, and they’ll do it for you. If you’re using a brokerage account, simply log in and enter the ticker symbol RBLX in the search bar.
There are a few different execution options to choose from, including:
- Market order: A market order is an order to buy the stock at the current market price that is generally executed immediately (subject to availability);
- Limit order: A limit order is processed once the stock reaches your specified price. For example, imagine you want to buy Roblox stock at $30 or lower. You would then set the limit price at $30, and the order will only execute when the stock reaches the set price or lower;
- Options contract: Options speculation allows for leveraged positions in a security at a fraction of the cost of the underlying asset. A call option allows the trader to profit if the price of the stock increases, and a put option enables them to profit if the stock price declines. Derivative products can only be traded on a margin account, which typically has higher minimum balance requirements than standard brokerage accounts.
Step 6: Monitor your investment
Roblox is part of the tech and gaming sector. It’s also one of the leading names in the emerging metaverse economy. Another company heavily invested in the metaverse is Meta Platforms (NASDAQ: META), the social networking giant, which has set its sights firmly on augmented and virtual reality, investing billions in the project.
However, the push has yet to be welcomed by Wall Street, the share price plummeting over 2.5 times since the announcement (though the tech industry overall has also suffered vast downsizing), indicating the big bet on metaverse could not pay off as expected.
For those reasons, you may want to track the performance of Meta, as it can give you a general idea of where the space is headed. In addition, since Roblox is distributed through app stores, it’s worth tracking news for Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOG), and Microsoft (NASDAQ: MSFT), especially given their control of the distribution channel.
So, while “set it and forget it” is a solid strategy for a diversified portfolio of ETFs, for single stocks like Roblox, investors should keep a close watch on press releases, company health indicators such as revenue and user growth, as well as macroeconomic conditions. Then, depending on your financial goals, use that knowledge to reassess whether it’s best to hold onto the stock or sell it.
Should I buy Roblox stock?
This gauge displays a real-time technical analysis overview for your specified timeframe. It can be a valuable technical analysis tool for many traders by simplifying trading decisions by demonstrating the real-time recommendations of popular technical indicators such as moving averages and oscillators.
Disclaimer: TradingView does not recommend trading financial instruments based exclusively on the advice of the Technical Rating indicator. These recommendations cannot predict future movements and are meant as assistance for spotting potentially favorable buy/sell conditions if this is consistent with their strategy.
Common mistakes to avoid when investing in stocks
Mistakes are expected when investing in stocks but can be avoided if you recognize them. For an in-depth guide on investing mistakes, we have compiled a list of 17 common mistakes and tips for preventing them. But, for now, let’s list some of the most typical ones:
- Not performing your due diligence on the stock;
- Having unclear financial goals;
- Attempting to time the market;
- Failing to diversify;
- Letting your emotions rule the investment decision-making process.
How to sell Roblox stock?
You can sell Roblox stock if you see the company performing differently than you’d expected or if you’ve reached the financial goal you set when you first invested in the company.
If you’re working with an advisor, they can create a sale order for you. However, if you have your own broker account, you can simply log on, navigate to the stock’s detail page, input the number of shares or dollar amount you want to offload, and tap sell.
Pros and cons of buying Roblox stock
The gaming industry enjoyed immense popularity during the pandemic as people were forced indoors. However, the return to a more normalized economy has meant decelerating growth for these companies, so it’s crucial to investigate both the pros and cons of Roblox before investing.
- Stable user growth: Roblox has demonstrated consistent user growth since the onslaught of the COVID-19 pandemic;
- Diversified offerings: Roblox focuses on creating a whole ecosystem rather than one particular game or genre. As a result, the platform may be able to offer something for everyone;
- Virtual money: Roblox collects the bulk of its revenue from in-game purchases made with its virtual money Robux while avoiding more intrusive monetization methods such as ads or loot boxes. This is also beneficial as users are incentivized to create content for Roblox’s games, continually updating the platform’s adventures.
- Growth downshift: Roblox sales have slowed down significantly as online gaming popularity is shifting to pre-pandemic levels;
- The company is not profitable: The company has yet to report a positive business result. For example, the company lost $300 million on an operating income level in Q3 2022;
- Reliance on young users: Because Roblox depends on children under 13, it must ensure its platform is a safe virtual playground for them by constantly censoring its content, shielding its platform from predators, and carefully handling the personal data of its younger users. Any missteps in those areas could endanger children and taint its brand;
- Tumultuous audience: Social trends among the youth are fleeting. A new viral sensation could have Roblox users abandon the platform in droves. Therefore, the company’s long-term growth banks on its ability to attract older users;
- No dividends: Roblox does not pay dividends to its stockholders.
Most growth stocks that soared during the pandemic rally have suffered drastic sell-offs due to rising interest rates, inflation, and other macroeconomic challenges.
So, though Roblox has a large, passionate fanbase and is riding high on a wave of new users, it’s important to remember that the current gaming craze isn’t guaranteed to last forever. In addition, Roblox is still a speculative stock, given its lack of profitability and poor financial metrics.
So, if you want to invest in it, you have to have faith in the company’s long-term concept and vision as well as in the future success of the metaverse.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about Roblox
What is Roblox?
Roblox Corporation is an American technology company that develops video games. The company is the developer of Roblox, an online game platform that allows its users to design their own games and play various games created by other users.
How to buy Roblox stock?
Roblox became a publicly traded company in March 2021, and its stock is available on the NYSE exchange under RBLX, which means you can buy shares of Roblox through your brokerage account.
Is Roblox stock a buy?
Whether Roblox is a suitable investment should be based on your risk tolerance, portfolio size, financial goals, and market experience. So always conduct your due diligence before trading. Also, note that past performance doesn’t guarantee future returns.
Where can I buy Roblox stock?
You can buy Roblox stock at various online brokers such as Revolut, Interactive Brokers (IBKR), eToro, Degiro, and Robinhood.