What Is Roblox? Everything You Need To Know

Roblox isn’t a single game, it’s a virtual environment that hosts millions of different games. It enables users to build and make money from their own games, and includes social communities.

Players traverse wildly different experiences—from raising virtual pets to first-person shooters and mini golf—but maintain one personalised avatar, who can make friends, chat and interact with other players within the Roblox universe.

Most Roblox games are free—and the platform’s game development tools and publishing processes are also free—because Roblox’s growth depends on user-generated games. Some game developers charge a one-off entry fee or make money via in-game transactions or by selling items for Roblox avatars.

Payments are made using a native currency called Robux (players can buy Robux with real money) which can be cashed-out by game developers once their earnings reach a minimum threshold. The company itself generates revenue by taking a cut of these transactions, as well as advertising and licensing games/IP to other companies.

Roblox exists in the grey area between traditional gaming and the growing emergence of blockchain-enabled games and the metaverse: web3 ecosystems defined by community-driven experiences and earning power based on players’ contributions and ownership of digital assets.

Futurist and experienced metaverse advisor Katherine Boiciuc says that while a full transition from Web2 to Web3 gaming was a way off, more immersive and collaborative gaming experiences were attracting strong funding: she points to a six-fold jump in funds raised by web3 gaming firms in India in 2022 compared to 2021, and multi-billion dollar investments by Meta and Animoca Capital.

“It’s a space that is hot and one to watch for investors,” she said.

Why Did Roblox Become So Popular?

In 2004, David Baszucki and Erik Cassel, who had previously worked together to develop educational software, launched Roblox as a hands-on way for kids to deepen their understanding of coding and game design. What began as an educational tool has evolved into a comprehensive marketplace to access and create commercially viable games.

Roblox’s success in the gaming industry is primarily attributable to its freemium, multi-game model and the way it harnesses its community’s creativity, which have both driven incredible growth in its user base.

“Roblox is becoming popular because of its platform capability. It means anyone, anywhere in the world can be a game designer, build a business, and generate passive income,” Boiciuc argues.

“The barriers to understanding and learning code are almost gone with the advancements of technology like OpenAI’s ChatGDP. This has caused a significant increase in the volume and quality of games on the platform.”

Tapping into Roblox’s ready-made ecosystem of around 77 million active gamers is also an appealing prospect for brands. Last year, Tennis Australia used a branded Australian Open game on Roblox to reach a young potential fanbase, and engaged more than 120,000 people on the first day. This includes broadening exposure for sponsors—the game’s visuals of centre court included the logos of real-life major partners.

Roblox (RBLX) shares kicked off at $US64.50 when it debuted on the stock market in 2021 through a direct listing. At the time of writing it was sitting at just over $US37 per share.

Growth in Roblox users surged in 2020-2021, boosted by kids looking for an entertaining outlet during the pandemic, which in turn saw Roblox’s market cap skyrocket. However the share price and valuation dropped considerably in 2022, based largely on a slowdown in users purchasing Robux (referred to as bookings), which ultimately impacts Roblox’s revenue.

Roblox: The State of Play in 2024

The share’s value rallied somewhat in January 2023 when Roblox released its December metrics, which revealed better-than-expected bookings of between $US430 to $US439 million—up 17-20% year-over-year. The December figures also indicated that daily active users were up 18%.

In May, 2024, Roblox was backtracking from bullish projections in an updated guidance. Roblox revised its bookings revenue from $US4.14 billion to $US4.28 billion to $4 billion to $4.1 billion for the full year, 2024.

On the back of the announcement, Roblox shares dipped more than 20% in early trading, falling $US8.61 per share, or 22%, to close at $30.42 on May 9. As of July 5, 2024, Roblox is worth $US37. The stock peaked at just above $130 in 2021.

Law firm of Kessler Topaz Meltzer & Check, LLP  has filed a securities class action lawsuit in the District Court of California in July against Roblox Corporation, alleging  “materially misleading statements and omissions” with regards to forecasts to the public, causing Roblox’s investors to “have suffered significant losses”.

Will Roblox Stock Go Up?

Whether the Roblox stock price significantly moves up or down will depend greatly on how well it can sustain growth while also reducing operational expenses. To date the company has not turned a profit, but it has an incredibly strong user base in an emerging high-value industry.

In a recent 2023 market prediction for the gaming industry, eToro analyst Josh Gilbert said despite drops in Roblox’s stock value due to falling short of investor revenue expectations, the company was innovating in ways that may spark investor optimism. This includes using its platform to host online concerts to engage users and exploring blockchain integration.

“The company is also trialing marketplace NFTs which include playable characters and accessories. If successful and integrated into the core user experience, this could stand to become one of the strongest use cases for NFT technology yet, outside of the art world,” Gilbert said.

Some analysts are skeptical that Roblox can continue to boom given its largely under 20s demographic, who may be reliant on parents to cough up the cash for Robux—the native currency that underpins in-game purchases and Roblox’s revenue. Especially in the context of looming financial dampeners such as recessions, high interest rates and costs of living.

Roblox Stock Price Prediction 2030

The metaverse market is projected to reach more than $US400 billion by 2027, driven primarily by entertainment and gaming use cases. In addition, the global in-game advertising market is forecast to reach $US12.35 billion by 2028. Leveraging these market opportunities, gaining users in new geographies, and achieving economies of scale may strengthen Roblox’s share price in the coming decade.

Twelve-month price targets by analysts with an interest in Roblox stock typically range between the $US20-50 mark, with a recommendation of moderate buy. While it seems unlikely that Roblox shares will reach the heights experienced by tech giants with trillion-dollar market capitalisations like Apple and Amazon, there is room for considerable growth.

Roblox is listed on the New York Stock Exchange (NYSE) and Australian investors can buy it by either:

• Working with a full service broker that has access to the NYSE
• Creating an account with an online trading app that offers access to US stock markets.

Another consideration is whether you want to invest in Roblox via an exchange-traded fund (ETF)—which is a more diversified investment—or buy individual shares.

To buy Roblox through a share trading app:

1. Select an app that supports trading on the NYSE. When choosing between platforms, compare the costs of accounts/trades, foreign exchange fees, whether it allows fractional trading and the usefulness of data/graphs it offers.
2. Set up your account and add funds to your account.
3. Search for RBLX or the ticker of ETFs that hold Roblox via the platform.
4. Choose how much to buy, when to buy and other order types. For example, you could create a limit order that triggers a purchase only when the stock reaches a certain price.
5. Monitor Roblox performance and stock value over time and adjust your investment as desired

The advice and information provided by ForbesAdvisor is general in nature and is not intended to replace independent financial advice. ForbesAdvisor encourages readers to seek expert advice in relation to their own financial decisions and investments.