Roblox Share Price Forecast August 2021 – Time to Buy RBLX?

Shares of American video game developer Roblox Corporation (NYSE: RBLX) are up by 13 points today (July 30th 19:59 UTC-4), carrying on with the positive momentum since it went public. After being frustratingly directionless for the past few months, the shares have now grabbed the attention of investors who are wondering whether this is the right time to pick up RBLX.

Roblox Corp – Technical Analysis

From Roblox Corporation’s financial statement, the market cap of the company is $43.866 billion with total assets of $2.816 billion. According to its income statement, the income for 2020 is $923.88 million with a profit margin of -27.41%. The company’s income for 2019 was $508.39 million. At the time of writing, RBLX is at $76.98 with an uptrend of 0.17%. The company’s debt to asset percentage of 34.93% for 2020 which is a slight improvement for 2019’s 35.47%.

Oscillators for Roblox Corp such as Stochastic RSI Fast (3, 3, 14, 14)(42.76), Williams Percent Range (14)(-65.36), Bull Bear Power(−5.62) and Ultimate Oscillator (7, 14, 28)(52.3) are pointing towards neutral. On the other hand, moving averages such as Exponential Moving Average (50)(82.01),  Simple Moving Average (50)(86.15), Exponential Moving Average (100)(78.87) and Simple Moving Average (100)(78.87) are pointing towards selling.

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Recent Developments

Shares of Roblox Corp have rallied to a high of nearly $104 since going public but has recently pulled back. Currently, it’s trading down almost 25% from its highs.  The company recently partnered with Sonu music to create music experiences for Roblox users. This also gives Sony music artists a way to target new audiences. The announcement was made on the back of Roblox facing a $200 million lawsuit where it was alleged that the company was streaming copyrighted music without the artist’ approval. Universal Music Publishing, Big Machine Records, Concord Music Group and Downtown Music Publishing are some of the big names involved in this lawsuit.

This is not the first time that Roblox has partnered with a music company. It hosted the first-ever virtual concert featuring Lil Nas X in November 2020 which was attended by over 36 million players. Roblox has also hosted a virtual Zara Larsson Launch Party which attracted over 4 million visitors which set a new record. The company’s earnings report for Q1 2021 revealed a 128% increase in engagement from the over 13 demographic. Active users for the company also grew to 42.1 million during the same quarter, which is an almost 79% increase. Roblox has also signed a similar deal with BMG which will allow them to tap into Roblox’s integrated in-experience music.

Should You Buy RBLX?

There are certain things that investors have to consider when deciding to go for RBLX shares. Analysts who are optimistic about the shares point towards its long-term growth potential fueled by its content creation, self-promotion, and monetization. However, bears in the market point towards the company’s userbase which consists mostly of users under the age of 13. There is a possibility that these users will grow out of Roblox’s simple offering to more advanced platforms.

Investors are concerned about Roblox’s medium to long term growth prospects rather than the short-term. RBLX’s potential failure to attract older users and increasing competition are two major reasons for this.  As the company is yet to prove that it can penetrate older age groups, investors should stay away for the time being. The demanding valuations of Roblox mean that the company has to grow much faster than what the market expects. They should wait and watch put for more news on how the company plans its roadmap forward.

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