Roblox Shares Forecast August 2021 – Time to Buy RBLX?

Shares of American video game developer Roblox (NYSE: RBLX) are in the red, currently trading around the $85 range.  The shares have surged by an impressive 40% since going public through a direct listing in March. However, with daily active users sowing down to 8% in July, investors are asking whether these shares are worth it in the long term.

Roblox – Technical Analysis

According to Roblox’s financial statement, the market cap of the company is $49.118 billion with total assets worth $3.074 billion. Revenue for 2020 was at $923.88 million with a profit margin of -27.41%, compared to $508.39 million in 2019.

Oscillators for Roblox such as Stochastic RSI Fast (3, 3, 14, 14)(67.31), Williams Percent Range (14)(−32.55), Bull Bear Power(2.67) and Ultimate Oscillator (7, 14, 28)(56.88) are pointing towards neutral. Moving averages such as Simple Moving Average (10)(84.17), Exponential Moving Average (20)(83.77), Simple Moving Average (20)(82.98) and Exponential Moving Average (30)(83.31) are pointing towards a buy action.

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Recent Development

Roblox has a growing platform of more than 46 million daily active users who connect and engage in various activities such as games, educational experiences, and virtual concerts,  all within the confines of a virtual 3D world called the metaverse. Revenue for the company was up by 127% year over year in the second quarter, which was already on top of a 68% increase a year ago. The company has been in operation for over 17 years, primarily serving a narrow demographic of users under the age of 13. However, the company has started focusing on ageing up its market potential, with its developers focusing on creating more mature content. Currently, more than half or 50.3%of its users are over 13, a first in the company’s history.

Growing its customers from older demographics is the company’s priority if it wants to accomplish management’s long-term vision of reaching one billion users. The company’s fastest-growing customer age group is within 17 to 24, opening doors for new monetization opportunities. Virtual concerts are one of those opportunities with Roblox reporting 36 million people watched a live virtual concert with Lil Nas X. It has also hosted the launch party for Zara, which has since broken all records, with more than 4 million in attendance. The company offers opportunities for virtual merchandise sales, mini-games, and other interactive activities.

Should You Buy RBLX Shares?

Investors interested in RBLX shares should look at the company’s newest opportunities including virtual concerts.  The company is continuing its trend of forming partnerships with big music companies, such as a strategic partnership with BMG to host a launch party for hip-hop artist KSI and a deal with Sony Music Entertainment. The older demographic that attends these concerts have a higher potential to spend money, which is a tremendous upside as it enters the non-gaming arena.

Concerts are just one tool that the company has at its disposal to attract older demographics. The company’s long-term goal still focuses on developing a social partnership. While some of that is accomplished with its current model, the company wants to turn Roblox into more of a “utility” platform for social interaction. If Roblox could attract investments from big tech firms, it can result in the company growing even more than investors expect it to. Thus now seems like a very good moment to go ahead and pick up RBLX, as it could be similar to buying Facebook shares after its 2012 IPO.

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