Roblox’s First Earnings Report Was Killer. So Buy the Dip in RBLX Stock.

What Happened to the Roblox Stock Price Today?

  • Gaming technology platform Roblox (NASDAQ:RBLX) reported its first ever earnings as a public company, and Wall Street liked what it heard, sending RBLX stock up about 5% in response.
  • Roblox sign logo at headquarters

    Source: Michael Vi /

    Roblox missed both revenue and earnings estimates. However, the company showed impressively durable user growth trends in early 2021.

  • The Roblox IPO price was $45. RBLX stock briefly rose above $80 shortly after its public debut. The RBLX stock price today trades below $70.
  • Recent weakness is a long-term buying opportunity.

Why It Happened

  • Roblox was a big Covid-19 winner.
  • It’s a platform built for kids to play digital games. In 2020, kids didn’t go to school, they didn’t hang out with friends, and they didn’t play sports. They were bored. So, they played a lot of digital games. Roblox was once such platform.
  • Through the pandemic, Roblox’s user base rose almost 40% over nine months.
  • There were some concerns that Roblox’s user growth trajectory would slow meaningfully in early 2021, as kids returned to school, sports, and playdates.
  • That didn’t happen much.
  • In the first quarter of 2021, Roblox reported that DAUs rose 79% year-over-year and that average hours played per day by DAUs stayed around two hours and thirty minutes. User growth and user engagement levels remained strong.
  • Both are falling in April. But only slightly. Roblox still added 1.2 million DAUs in April, while average hours played per by DAU slipped only slightly below two hours and thirty minutes.
  • The durability of Roblox user growth and engagement is impressive. It speaks to the long-term staying power of the platform. RBLX stock is responding by rallying.

Does It Matter?

  • These numbers absolutely matter for RBLX stock.
  • In the big picture, Roblox is creating an entirely self-sustaining digital gaming ecosystem that fits in perfectly with the dominating trends of digitization and decentralization that are reshaping our world today. Within the next decade, we see Roblox turning into a gaming platform used by hundreds of millions of folks worldwide.
  • The long-term potential here is enormous. The only thing holding RBLX stock back were fears surrounding how growth would shape up post-Covid.
  • It’s shaping up pretty well.
  • With those fears eased, RBLX stock should head higher from here.

Bottom Line on RBLX Stock

  • Wall Street analysts believe RBLX stock is worth roughly $80 today.
  • We agree with that price target. Our fundamental analysis of the company’s earnings growth potential over the next decade implies a fair valuation for RBLX stock of $80 today.
  • Thus, below $70, Roblox stock is attractively undervalued and ready to pop.

If you haven’t noticed, the world is being digitized. Rapidly. The world we are sprinting into is one where the entire consumer ecosystem gets almost fully digitized — and world wherein >50% of shopping, gaming, and communications happen in the online channel.

Roblox is a major force in this digitization megatrend. The company isn’t just creating a bunch of games that kids will love to play in a “digi-everything” world. Rather, the company is developing a technology platform and digital economy upon which people can build, play, and watch games. The platform here is so much more valuable than the sum of the games, as the real value lies in the technology, the ecosystem, the community, and the connections.

It is because of these attractive features that we believe RBLX stock is a great long-term investment opportunity to play the “Digi-Everything” megatrend.

But not the best one, and not even one of the best ones.

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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this video.

By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the focus of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative next-generation mobility stocks, become a subscriber of Innovation Investor today.

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