Perhaps the most anticipated direct listing we’ve seen in some time is upon us. Shares of Roblox (NYSE:RBLX) began trading today, and opened substantially higher than the $45 price that was initially set by the New York Stock Exchange. At the time of writing, RBLX stock are 60% higher, at nearly $71 per share, on heavy volume.
Here’s why some analysts believe the stock may have much more upside potential from here.
Investors Target a Massive Near-Term Range
As with any IPO or direct listing, volatility is the norm in any stock’s early days. The market undertakes a price discovery process on new stocks, and as such, massive stock price swings are normal.
A recent poll of investors undertaken by research firm Bernstein suggests investors have a wide range of expectations for how this stock could perform in the near term. On the upside, those bullish on RBLX stock believe a $120 level is reasonable. Pessimists have indicated the stock could be expected to dip below the $45 price set by the NYSE.
It appears optimists are winning out.
Retail Investors Like RBLX Stock Right Now
Investors in Roblox cite the company’s unique business model as a reason to own this gaming company right now. Essentially, users develop their own games on the platform. Accordingly, developers are able to rake in 30% of the proceeds of the game, including virtual outfits and avatars, with the remaining margin going to Roblox.
This business model has been very successful, and has resulted in a very active developer and user community. Roblox’s user base mainly consists of teens and tweens, with more than 31 million daily active users as of the past quarter according to its S-1 initial public offering prospectus.
Accordingly, it’s no surprise this stock is surging today, given what we’ve seen with other high-flying meme stocks of late. Indeed, if we see retail momentum continue, RBLX stock could be a winner for traders betting on this IPO.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.