Roblox (NYSE:RBLX) has been on fire lately because of strong app store performance. It’s been the number one downloaded game for several months in a row, and AppAnnie just revealed that it was the highest grossing app in the first quarter. Roblox stock is giving back those gains on weaker-than-expected May usage numbers, however.
One thing to note is that Roblox’s monthly active users dropped from April to May. At the same time, the amount of money Roblox made per user (average bookings per user) also fell, and total bookings growth meaningfully decelerated.
That said, Roblox’s monthly users stats don’t concern us.
Roblox is a kid-heavy platform. School just ended in May, and families are likely taking their kids on their first summer vacations in two years. Of course, this non-repeatable dynamic will cause fewer players to be hopping into Roblox. Importantly, this won’t last. Summer vacation after a pandemic only happens once. User numbers will make a rebound in June.
We are, however, concerned by their bookings numbers. Roblox total engagement time increased this last month, but Roblox monetized these players worse than the company did in April.
So, players are playing the game longer than before, but they’re spending less on average. We’re seeing more Roblox interest, but less interest in Robux, their in-game currency. And we don’t have a good explanation for why Roblox struggled to monetize as well as it did previously.
But, when you zoom out and see average bookings per user has been a steady uptrend, we become less concerned. The evidence suggests May’s decline is an anomaly and not a new trend.
If this is so, then the dip is a buying opportunity. Roblox is an extremely innovative company creating the future of gaming. Their long-term potential through VR, NFTs and metaverse-building is enormous.
That is exactly what we are doing in my premiere newsletter service, Innovation Investor. We’ve already bought Roblox stock, and we’re up roughly 15% on that position despite the recent selloff. If we’re right on Roblox, it could be among the most profitable moves we’ve ever made.
But RBLX isn’t the only company we’re bullish on in our Digitainment portfolio. There are currently eight other stocks in that area which we’re heavily bullish on, including a company that represents the future of mobile esports,
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.