Watch Sidni's pitch on Roblox HERE

Check out her memo on Roblox HERE

And be sure to follow @sidnistandard!

Pitch transcript:

Roblox is a great company to consider for a medium to long term investment— here’s why.

More than two thirds of US kids age 9-12 play Roblox. Kids spend a lot of time on it. This is something I’ve personally witnessed with a family member.

Kids rush to play this game. They spend an average of 2.6 hours a day on the platform. 43% of Roblox users are 13 and over and the fastest growing demographic is ages 17-24.

It is amazing for advertisers. Anzu, a dynamic in-game ad solution recently teamed up with Robolox to provide creators with a new revenue stream. Roblox has a hefty 75% take rate where 25% goes to app stores and payment processing, 22% to Robolox platform hosting and investment, and 27% to cover Robolox operating costs.

This move is in line with Roblox’s bet on the creator economy building the metaverse rather than one centralized company doing it.

Revenue is expected to be between $167 million and $170 million. That is up ~98% to 102% y/y.

As of August 2021 Roblox had 48.2 million daily active users. That’s up 32% from August of last year, and up 4% from July of this year.

They have a virtual goods market where users can use Robucks to purchase in-game items. In 2020 Roblox did $1.9B in bookings, equating to an average of $58 per daily active user for the year. This represents a 40% increase y/y.

They also recently started adding a lot of different experiences to combine worlds. One of the things they want to do is combine music into their platform. They’re doing that with listening parties, which give music fans an immersive experience to discover and share new music with their friends.

Roblox has the highest cash return on invested capital out of similar gaming stocks, namely Activision Blizzard, Electronic Arts, Take Two Interactive, Unity Software, and Zynga.

Roblox can be played on both computers and mobile devices. The area where we are seeing the most growth is in mobile gaming. The fact that Roblox can capitalize on both mobile and PC is a huge win for the company.

Roblox’s market cap $42.76 billion.

The musical artist Deadmau5 did a series of concerts within Roblox in October. See here: https://www.youtube.com/watch?v=UJlrNAtnSCA

Roblox is a way for people to exist in the digital world.

Taylor Sulik question: What do you think about the users now continuing to use Robolox as they get older? @taylorsulik

Sidni Answer: I see the platform continuing to grow with the users as opposed to users aging out of the platform. If you look at how NFTs are being showcased and integrating other cryptocurrencies as well, there will be the ability to exchange goods, which will be a way for Roblox to keep people engaged as they grow older.

Joshua Simka: I’m also concerned about the staying power of the platform. The main age group they have now is very young, and that cohort tends to have tastes that change very quickly. @tomato

Sidni Standard: Times are changing a lot. Now we have video game leagues that are a new career for people. It used to be that you’d play games as a young person for entertainment but now that you can literally make a career out of it, gaming has more staying power.