There’s no shortage of investor optimism in video game platform Roblox (NYSE: RBLX) — perhaps for good reason. The company already commands a massive market cap of $39 billion as of Tuesday’s close, a sky-high premium given the company hauled in just $924 million in revenue in 2020. However, Roblox has a young and growing user base and has its eye on blurring the lines between the real and virtual world. This could be a millionaire-maker stock — but just remember to start small if you decide to buy now.
Roblox operates a free-to-play virtual world where users can meet, build, and share experiences together. The basic user metrics are impressive: Over 8 million developers using Roblox Studio to create 3D multiplayer experiences and games, 32.6 million daily active users (DAUs), and nearly $1.88 billion in bookings (money moved to Roblox but not spent yet) in 2020.
As impressive as the user counts are, paying up for this video game stock may give some investors pause. Roblox’s initial 2021 forecast is for DAUs to increase only 6% to 12%, for revenue to grow at least 56% to $1.44 billion to $1.52 billion, and for bookings to increase at least 6% to $2.0 billion. Trading at 26 times expected sales for the next 12 months, this is one expensive video gaming stock.