How to Buy in Roblox Stock: Invest in the Popular Mobile Gaming Platform
Roblox is an online gaming platform developed by the Roblox Corporation.
It’s grown highly popular, especially in the midst of the Covid-19 pandemic as people spent more time at home and looked for new entertainment options.
If you’re interested in investing in Roblox, here’s what you need to know.
Roblox Corporation (ticker symbol: RBLX) is a technology and gaming company. The company’s primary product is Roblox an online game platform.
It gives users the ability to create and play their own games using the Roblox engine.
The company was founded in 2004 by David Bazucki and Erik Cassel and it went public in March 2021.
Roblox Corporation primarily makes money through microtransactions available in Roblox. While the game is free-to-play, players can use real-world money to buy digital subscription services and cosmetic items for use in the game.
Research and Analysis
Whenever you’re thinking about investing in a single company, it’s important to take the time to research the business before buying shares. What research method you use will depend on your personal preferences.
One common strategy is called fundamental analysis. This involves looking at a business’s stats and fundamentals, such as revenue, expenses, debt, and profits. Fundamental analysts aim to find investment opportunities in companies that are undervalued by the market.
Another common strategy for fundamental analysts is to look at similar, competing businesses to see how they each compare.
Some of Roblox Corporation’s top competitors include:
- Epic Games (privately held)
- Valve (privately held)
- Mojang (a subsidiary of Microsoft)
Another research method that some investors employ is called technical analysis. Technical analysis involves looking at stock charts to try to identify different patterns. Technical analysts believe that certain patterns indicate future rises or falls in a stock’s price.
Keep in mind, even if fundamental or technical analysis for a company is positive, there is no guarantee that an investment will succeed. The company could fail to capitalize on its opportunities, fall foul of bad luck, or be overtaken by a competitor.
Whenever you invest, you’re accepting some level of risk. If a company does well, you’ll earn a profit, but if the company fails, you could lose a lot of money.
Every company relies on its ability to produce, maintain, and sell new products and services. Without successful products, companies have nothing to sell and no way to produce revenue to keep the business running.
Roblox has a unique advantage here in that it primarily provides a platform for others to develop on, but that doesn’t mean it is free from risk.
The world of video games and technology is constantly changing and consumer preferences are always in flux. The game that is popular today can lose popularity and players over time.
Consider major video games and franchises such as World of Warcraft or Halo. These games remain popular but are generally less popular, and therefore less lucrative than they were at the peak of their popularity.
If a new game comes along or consumers begin to move on from Roblox, the company’s finances could suffer.
Roblox’s player base skews younger and the company relies on microtransactions for most of its income. In-game transactions, including loot boxes and microtransactions, have become a hot topic in recent years and some lawmakers have looked into regulating them in some way. Roblox has already dealt with accusations that it makes it too easy for children to spend large sums without parents realizing what they’re doing.
If regulation affects microtransactions in games, it could impact Roblox Corporation’s profitability.
Other Ways to Invest in Games and Technology
Buying shares in a single company can be a very exciting way to invest, especially if you personally like that company and its products.
Following the news and watching for the company’s success is fun, but it’s also risky to put all of your eggs in a single basket. If that business fares poorly, you won’t have any other investments to pick up the slack.
One important way to reduce investment risk is to build a diversified portfolio that holds shares in multiple companies.
One easy way to diversify your portfolio is to buy shares in a mutual fund or ETF. These funds hold shares in hundreds or thousands of businesses, giving you a simple way to diversify.
Some funds will hold a variety of different stocks while others focus on specific industries, such as technology or gaming. That means that you can focus on a specific industry if you want to.
Most mutual funds and ETFs will publish a list of their holdings. If you want to make sure that some of your investment goes toward a specific stock, such as Roblox, you can read the fund’s disclosures to make sure that it holds the company you’re interested in.
How to Buy Roblox Shares
If you’ve done your research and decided that buying shares in Roblox is the right strategy for you, the first thing that you need to do is open a brokerage account.
Open a brokerage account
Brokerage companies help people invest in stocks, bonds, and other securities through their brokerage accounts.
There are many brokerage companies out there, each with its pros and cons.
Some brokerages, such as Fidelity and Vanguard, also operate their own line of mutual funds. If you invest in your broker’s funds, you can sometimes get perks like commission-free trades or priority customer service.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
When you’re ready to buy shares in a stock, you’ll have to submit a buy order. There are two main types of buy orders you can use.
With a market order, you specify the number of shares to purchase.
Your broker will purchase those shares at the cheapest price available. However, this means that if there aren’t any shares available at the expected price, you might pay more than you expect.
With a buy-limit order, you specify both the number of shares to buy and the maximum price you’re willing to pay for each share. Your broker will buy those shares at the lowest price available, but will not pay more than the limit price.
With a buy-limit order, you can guarantee the maximum price you’ll pay, but if no shares are available for less than the maximum price you set, your trade won’t go through.
Market orders are simpler to place but can be unpredictable. You’ll buy shares at the cheapest available price, even if that price is far higher than you expect to pay. This can often happen if you’re buying shares in companies that are not frequently traded.
Limit orders are generally safer because you can guarantee the maximum price that you’ll pay.
Consult an Advisor
All investing is subject to risk. Even with a diversified portfolio mutual fund, you can lose money. However, buying shares in just one company, such as Roblox, can be even riskier. Investing in a single business is exciting, but you should try to keep investments in individual businesses to a small portion of your portfolio, leaving the majority of your money in diversified mutual funds.
Consulting with an advisor to help you make good investing decisions is a good way to make sure you don’t risk too much of your portfolio on high-risk stocks.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.