Roblox (NYSE:RBLX) is one of quite a few interesting stocks to have been recently listed, and it’s caused quite a storm in the tech world.
Like many tech stocks, it’s not exactly cheap, and over the past two weeks since the stock was launched, the price has fluctuated on a daily basis but not risen substantially yet.
Critics of the pick are quick to point out that Roblox is trading at about 50 times sales, which means it might look like a very overpriced stock, although this figure comes down to around 25 times sales when we look at bookings rather than sales: this includes revenue from gift cards which has already been taken in but hasn’t yet been spent.
What Is Roblox?
Roblox is clearly being valued by investors not solely because of its current earnings but on the basis of the potential for growth in the future.
For those not in the know, Roblox is an online gaming platform and game creation system which invites users to create and share games online, as well as to play games created by other users.
In other words, Roblox is to games what YouTube is to videos.
As such, there really is nothing else like it on the market and it holds enormous potential to become huge.
Games are now a multi-generational form of entertainment, and a platform like this – which makes a steady stream of profits quite passively – could hold the key to some fantastic earnings years down the line.
Should I Invest?
The trick for investors looking for short-term growth is going to be knowing when to invest.
Since listing in early March, the price of RBLX has to see any significant gains, which means that this isn’t a stock that’s necessarily going anywhere just yet.
The stock also isn’t without risk; listing a company whose product can be streamed from anywhere in the world and keeps kids busy at home during an international pandemic isn’t just a coincidence: it’s sound business sense.
Whether Roblox will be able to live up to its own hype post-pandemic, when kids are back in school and real-life continues – is the big question for investors.