I bought both of my daughters’ shares of the recently IPO’d Roblox (RBLX) in their UGMA (aka children’s) brokerage accounts. This stock buy was a no-brainer, the one we’ve been waiting for in the Robleto household.
What is Roblox?
If you don’t know what Roblox is, I will guess you don’t have kids in elementary school. Briefly, Roblox is a democratized app-based gaming platform. Think Apple app store or Google Play store, but it’s not an iOS; it’s an app on those platforms that allow you to launch and play games.
And there are lots of games, thousands of games on the Roblox platform. That’s in part because anyone can use their SDK (aka game building toolkit) to get their game idea built and live.
Naturally, this low-bar does lead to a long-tail of games that are just garbage. However, there are some mega-hit real captivating ones as well.
How captivating?
And by real captivating, I mean, REALLY captivating.
If they are not sleeping, in school, or being forced to go outside to play, my two girls would try to spend every hour of the day playing Roblox, (or watching YouTube and Twitch clips of other people playing Roblox).
They’ve been playing for a few years now and the game took on a social element. But once the pandemic hit, Roblox became the #1 primary way my kids stayed connected with their friends.
We tried Messenger Kids and other targeted kids’ social apps, but they primarily were for talking; Roblox is all about playing.
My girls and their friends all hop on the platform together, avatars assembled, and a group-chat is going. Like pre-teens of yesteryear who wandered the mall in a pack from store to store, these kids today are digitally wandering from game to game and battling or fulfilling the quest or using the setting for the role-playing.
And it’s a big pack too. Nearly ALL of their friends are on the platform. When I read statistics that say half of 8 to13-year-olds are on Roblox, that number seems far too low. In our world it’s got to be closer to 80%.
Do they make money?
Yes, the company does make money, and as I understand it, it does a better job sharing the profits with the game designers (compared to app developers on Apple’s iOS). So the game designers do make money. They make MY money!
My girls have converted so much birthday, Chinese New Year, and allowance money to Robux, the platform’s currency, to spend on digital outfits, digital pets, and private servers to play with friends without others around.
It’s at the point where I don’t even give the girls allowance in US currency; it’s just all piped directly into Robux.
Is it safe for kids?
Roblox seems like a white-hat company, trying to do good. They recognize their user base is underage and have reasonable safeguards in place like they can’t chat/text numbers (which could lead to giving out passwords or credit card numbers.)
I have heard too many stories of kids getting scammed, especially in games that allow trading of digital assets (clothes, pets, etc.). But that’s died down more as they approached IPO, so I can tell new security efforts have been kicking in.
Are the graphics amazing?
No. As a designer, the graphics quality (or lack thereof) is offending to the eye, but clearly, that is intentional. They are following the precedent set by Minecraft of not even trying to compete on graphics quality. The environments and avatars are clunky, underwhelming, and somewhat glitchy, but consistently so. It likely makes it easier to onboard users to any new game (as well as likely making it a more out-of-the-box SDK for more straightforward game building too)
Is the stock worth the price?
The RBLX stock valuation I read is too high. I don’t know. I may work at The Motley Fool, but not as an analyst, so that’s not something I will assess. Nor would I (or would I be allowed to) recommend Roblox to anyone specifically.
I will share that I didn’t pay much mind about the price when buying for my ten and 8-year-olds cause at their age, they can be extremely long-term investors. They have plenty of time to ride out any correction and focus on what we expect is a future full of growth.
So, thanks to the two elementary school kids in my home, this is the most Peter Lynch’ian investing we’ve ever done. “Buy what you know.” is my paraphrasing of Peter Lynch.
We’ll my kids sure know Roblox and think it’s already THE platform and only getting better.
Disclosures: All thoughts and explanations — the accurate ones and especially the inaccurate ones — are all my own and do not reflect my employer, who does not pay me to make stock recommendations, (they pay me to make stock recommendations look pretty). I do work at The Motley Fool. I do own the stock mentioned here, RBLX, that was sort of the point of the article. Yes, I do have a Roblox account. My handle is MadnessFunFun because that’s how the kids told me to write my username. And yes, I do feel like that Steve Buscemi meme when I log on with that handle to join my girls and see if I think the games are appropriate for them.
MadnessFunFun in a game in Roblox