How To Invest in Roblox Stock: 7 Step Guide

Roblox Basics

Roblox is a social phenomenon for kids under the age of 16. It combines gaming, game development, and social media into one platform where kids develop, game, and interact. The primary way Roblox makes money is through advertising on the platform. Key advertisers include Disney, Lego, and Warner Bros. The company also has licensing agreements with Toys ‘R’ Us and Walmart.

Roblox Stock Symbol & Price

Roblox is found on the New York Stock Exchange under the symbol RBLX. Its shares opened at $64.50 with a market capitalization of $42 billion on March 10, 2021. It saw a high in November 2021 of $134 per share. As of March 2022, the stock is trading in the $40 to $42 range.

How To Buy Roblox Stock In 8 Steps

This report is not a recommendation to buy RBLX but instead a guide on how to purchase the stock. Investors interested in pursuing a potential investor should consider these steps while also doing their due diligence on the stock.

Step 1: Research Roblox’s Financial History & Reports

Learning about Roblox’s financial history and reviewing their reports will give investors better insights about the company. Roblox puts out quarterly reports that include an income statement, balance sheet, and statement of cash flow. These reports are important to help investors determine cash flow trends and earnings growth.

Step 2: Review Their Annual Returns

Every publicly traded company must file an annual report with the Securities & Exchange Commission. Use this report to determine valuation growth and how this compares to other growth stocks like Roblox. What are other gaming platforms valued at, and how are their stocks performing? Look for trends that suggest what direction Roblox stock would be moving in.

Tip: Look at the stock’s annualized return or the history of its Price-to-Sales ratio to see how much Roblox has increased in value in the past year.

Step 3: Vet Roblox’s Potential vs. Investment Goals

Investors want to know whether a stock will be going up in the future. While there is no guarantee that past performance and expert insights will lead to a future bump in stock price, ratings summaries help investors look for stocks that will perform well.

The various ratings help investors determine whether or not the stock fits into their investment goals and overall time horizon. As of data in March 2022, Roblox is considered a good buy, with experts feeling bullish on the stock based on objective, quantitative data. Future ratings may turn bearish on the stock, which would be indicated by sell ratings.

Step 4: Identify Roblox’s Risks

Look at the risk of the stock. Technology stocks tend to be more volatile than other sectors and Roblox is no different. Since its direct listing, the stock has seen wide price fluctuations. Investors need to be comfortable with the risk of investing in Roblox.

Tip: Roblox has parents concerned about cyberbullying and adult content exposure from predatory adults. Evaluate how these concerns can change how Roblox functions and whether that would be good for the stock.

Step 5: Choose Where To Buy Roblox Stock

Investors will need a brokerage account to buy Roblox stock. Investors can choose between a full-service brokerage where they pay a full commission for the purchase and can get advice from a broker or a discount brokerage where they pay nothing or a small fee to conduct the transaction on their own.

The brokerage account can be a qualified or non-qualified account. Qualified accounts include IRAs and rollover IRAs that benefit from tax-deferred growth. Non-qualified accounts are standard trading accounts that get no tax benefit in the structure of the account.

Step 6: Select Number of Shares & Investment Approach

Investors need to set a budget for the investment. Will Roblox be a big or small part of their overall portfolio? As such, investors should select how many shares they will purchase and what their investment strategy will be. Investors can choose to follow a long-term hold strategy, short-term trading, or swing trading strategies.

Step 7: Select an Order Type

When buying the stock, the investor must choose an order type. There are three primary order types that most investors work with that include:

• Market order: Executed immediately when it is placed for the market price of the stock.

• Limit order: Only executed for a price less than that set by the investor. Investors don’t want to pay more than a specified price with a limit order.

• Stop order: This is also known as a stop-loss order. Investors buy or sell a stock once it reaches a designated price.

Step 8: Buy Stock & Submit Trade

In order to complete the purchase, the investor must submit the trade. The process to submit a trade includes a confirmation of the trade details which state how much stock to buy and any limits that might be noted by the order type. Once the confirmation is complete, the investor submits the order and the transaction is complete.

Bottom Line

Roblox is a gaming stock in the technology sector. Investors considering a purchase in Roblox should review its financials and compare it to other gaming stocks targeting the same demographic.