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$350M$589M

IPO Roblox

Online gaming platform
IPO
Medium risk

Revenues in 9M 2019 - 9M 2020

Invest in IPO Roblox

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Investment Idea Details
The Company

Roblox is an online entertainment platform for shared digital experience that brings people together through play. It enables anyone to imagine, create, and have fun with friends as they explore interactive 3D experiences produced by developers using their desktop design tool, Roblox Studio. Roblox has raised a total of $336M in funding over 8 rounds. It was founded in 2004 in California, US.

Roblox operates a human co-experience platform, where users interact with each other to explore and develop immersive, user-generated, 3D experiences. Upon signing up for Roblox, a user personalizes their unique Roblox identity, the avatar. Users are then free to immerse themselves in experiences on Roblox and can acquire experience-specific enhancements or avatar items in Avatar Marketplace using the virtual currency, Robux. Any user can be a developer or creator on the platform. Developers build experiences published on Roblox and can earn Robux through microtransactions in their experiences, through engagement-based payouts, and by selling virtual items in the Roblox virtual economy.

Roblox platform consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud. Roblox Client is the application that allows users to explore 3D digital worlds. Roblox Studio is the toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client. Roblox Cloud includes the services and infrastructure that power Roblox platform.

Market Opportunity

An average of 36.2 million people from around the world come to Roblox every day to connect with friends. Together they play, learn, communicate, explore, and expand their friendships, all in 3D digital worlds that are entirely user-generated, built by the community of nearly 7 million active developers.

Daily active users on Roblox grew 47%, from 12 million in 2018 to 18 million in 2019, and grew 82%, from 17 million in the nine months ended September 30, 2019 to 31 million in the nine months ended September 30, 2020.

Mobile games made up 60% of revenue for the global video game market in 2019, generating $49 billion in revenue. All game segments saw an increase in engagement and revenues as a result of the COVID-19 measures, but mobile gaming saw the biggest increase. In total, mobile games will generate revenues of $77.2 billion in 2020, growing +13.3% year on year. There are a few reasons why mobile will enjoy more growth than both PC and console gaming: mobile gaming has the lowest barrier to entry when almost everyone has a smartphone and the mobile development process is less complex.

Risks

Roblox has experienced rapid growth in recent periods due to COVID-10, and the recent growth rates may not be indicative of future growth or the growth of the market.

Roblox depends on effectively operating with mobile operating systems (App Store and Google Play), hardware, and networks that it does not control; changes to any of these may significantly harm user retention, growth, engagement, and monetization of Roblox.

Many of the Roblox users are kids under 18 years old. The reputation of Roblox as a safe and civil environment for children is very important to the success and if Roblox fails to protect users, the business will suffer and results of operations could be materially and adversely affected.

Financials

Roblox generates revenue through the sales of Robux to users. Users can spend Robux to purchase access to experiences, enhancements in experiences, and items in the Avatar Marketplace. Robux are available as one-time purchases or monthly subscriptions.

The company booked $727M in revenue for the last 12 months. Gross margin is around 74%. The company is enjoying rapid expansion with revenue growth of 69% YoY in the first 9 months of 2020. In addition, Roblox has demonstrated solid operating results. Free cash flow was $6 million and $293 million in the nine months ended September 30, 2019 and September 30, 2020.

Roblox competes for users and their engagement hours with several global technology leaders, global entertainment companies, global gaming companies (Activision Blizzard, Electronic Arts, Take-Two, Valve, Unity, Zynga), online content platforms and social platforms.

Roblox creates a unique gaming ecosystem for children and teenagers. It has significantly increased its revenue over the past few years, has shown positive free cash flows, operates in a fast growing and large market. The expected market cap of Roblox is $25 billion (given a P/S ratio of 35x). The company is expected to become public in the beginning of 2021.

How IPO Investments Work
1. Collection of funds

2-3 weeks before the start of the company publishes information about the opening of trading: financial statements for 3 years, a description of the company's business, plans for the future, as well as the risks that management sees in their own business. We analyze such offers and publish the best ones. Investors apply for deposits. Before the deadline for applications, you can change the request or cancel it.

Publication
21 Dec
Threshold amount
$50
2. Buy shares

We submit one large application for the purchase of shares by pre-subscription with reduced price to large investors. The application may be rejected in part or in full. Over the past three years, our applications have been rejected only three times. The next day, or every other day, we'll know at what price and at what percentage the order is executed, and we'll post it on «The my investment page».

Submit applications before
TBA
3. Start Bidding

The price of shares is rising from the first day due to the demand of investors deprived of the opportunity to buy shares before trading. Most of the stocks we've been recommending buying over the past three years have been starting to trade on the stock exchange at tens of percent higher than the price at which customers bought the shares. There comes a Lock up period when it is forbidden to sell shares purchased by subscription. Typically lasts 3 months.

Start Bidding
TBA
Return forecast
TBA
4. Receiving profit

After the expiration of the Lock Up period, the investment is automatically closed and the investor receives a profit on account of the deduction commissions UT. You can always view the results of your past investments in investment archive.

End
TBA
Early profit fixation

Although no shares are allowed to be sold during the lock-up period, our traders seek to offer investors fixed profit by way of using various financial instruments, including forwards, options, short positions etc.

From the investor’s point of view this means that he or she may close an investment by paying a certain part of its value (as a rule, approximately 15 percent). This is due to high prices for the instruments which are employed to ensure availability of fixed profit. As such, you shall press any relevant button in the Investor Account as soon as it is active.

The closing procedure is similar to commencement of investment business. You shall file a bid which is executed within a business day by UT. So, your investment is closed at the price currently prevailing on the stock exchange. However, we rarely recommend using this feature, since upon expiry of an applicable lock-up period the average performance is higher.

Fee

FOR ENTRY

3 per cent of the share price. This fee is charged as soon as your investment bid is confirmed.

FOR EXIT

1.75 per cent of the purchase price paid for your shares as soon as trading is closed. This fee is charged upon closure of any relevant investment.

SUCCESS

20 per cent of the profit your derive. This fee is charged only if you show positive performance as of the moment any relevant investment is closed.

TO EARLY EXIT

Usually, 15 per cent (depends on the stock exchange environment). It is calculated per each investment individually.

Advantages Enjoyed by Those Investing with United Traders

RELIABILITY

Our risk managers ensure proper support throughout the entire transaction.

IN THE PROFIT FROM THE FIRST DAY

Such an approach allows it to limit extra risks related to bankruptcy of start-ups and considerably increase profit vs investors purchasing shares on open Market.

LOW ENTRY THRESHOLD

Millions of dollars are required to buy shares on a subscription basis. We have generated a pool of traders and investors which enables any newbie to participate in any transaction as aforesaid by investing just USD50 or more.

Invest in IPO Roblox

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