A lot of people have been reaching out to me asking me: hey jeff. What are your thoughts on? You know, roblox, as a company what’s their business model? Where do you see it’s going? Should i invest in it and so forth? So in this video i’m going to cover a couple, key topics that you should know, if you are thinking about investing in this company i’m, also going to go over some comparisons of other ipos. Personally, i will not be investing in roblox for the foreseeable future. I’M. Gon na go over exactly why uh and what i would need to see before investing in it. So stick around guys. You’Re, not gon na want to miss this. For those of you that are new to the channel. Consider leaving this video a like subscribe to the family, truly appreciate it. If you are interested in joining our private community, we’ve got over 250 members growing strong over the last few weeks, it’s the first link in the description so check it out guys all right. Let’S get into the video first off a roblox ipo tomorrow. What do you need to know? Okay, uh roblox was supposed to go public public in 2020 and you’ve seen some explosive trading debuts of airbnb and doordash, which we’re going to give some comparison to as well. A couple things that roblox is doing well: okay, they’re going public via direct listing. The main point of an ipo is to raise capital all right, which is good for them.
After postponing the ipo roblox raised another 520 million dollars from investors in a private funding round. The deal gave roblox a 29.5 billion dollar valuation up fold from a year ago. I think that’s a little bit frothy of evaluation, because in 2020 they’re not even going to do a total of 1 billion dollars in revenue um by the amount of growth that we’ve seen. I would expect 2021 to be a little bit over a billion dollars in revenue, but i still find that valuation to be a little bit frothy uh roblox was founded in 2004, so there’s a lot of time. Energy. You know engineering behind this um it’s, not a new company which is good it’s, not a startup it’s good it’s been around for a while. So i do like that. Okay, there are two crucial parts to their business model. The first part is the gaming platform in which users, developers or gamers build and play games, which is good, but they can also buy and spend robux, which is their in game currency to upgrade their avatars with accessories, clothing or special powers. Revenue grew 56 in 2019 and the first nine months of 2020 revenue grew even more of 68. A couple things on that. Yes, i could see a little bit of the covid lockdown helping enhance their growth, but i will also tell you from being born at the end of 1989 uh children. You know, kids, you know young teens these days are not outside as much as they used to be.
I remember you know it took me forever to get an n64 and everybody in the neighborhood would always be outside. Naturally, times have changed, everything’s gone much more digital uh and you know kids spend more time in front of the screen, so i do see covid kind of helping them as well, but i don’t look at it. As you know, an at home stock, like uh other people kind of have mentioned before so um. Do you want to mention guys there’s 13 and a half million users, which i was kind of surprised or sorry? This is daily active users. I was kind of surprised. I thought that number would actually be a little bit higher um, but it also gives a huge opportunity for growth. I will be honest. I did not hear of roblox until probably a couple months ago, when i had read about it, um, you know via a via a stock article okay, because of what was set to happen. Not not anything to do with. You know uh them as a company or their gaming software. I have a little guy he’s just over three, so he’s not really into this yet, but he certainly watches you know people play games on you youtube, paw patrol and whatnot, but so 13 and a half million like i said it wasn’t that much. However, it is poised for uh lots of growth, especially as people. You know, kids it’s, just you invite your friends, invite your friends, invite your friends which is awesome.
So this is the revenue chart which is great it’s cons, it’s considerably. You know up trending, which is awesome. I did read that the ceo had so that they do expect their percentage growth to slow down, which is something that i mentioned when we talked about neo it’s, very easy to double your sales when your sales are very low and as you get much larger uh, It just begins to get a little bit harder, so he did expect that. However, he does expect revenue to continue to grow, which is a very good sign. Okay, um. This is something else that i love about. The company is that it’s? Not just that you can add on and and buy uh. You know certain perks for your avatar and so forth. They do have a monthly membership subscription tier cost of 5, 10 and 20, which is very good, it’s, very low end. I love these subscription based business models. You know it started off, you know really it’s, just you know with the gyms and the fitness world and then it’s really just rolled into everything. You’Ve got neo, which i’ll mention again, you know doing the battery as a swap service. Getting that subscription based model is is a very, very, very strong model, especially in 2021. So i like that and it’s such a low end for parents to just say yep here’s. Five bucks a month to my son, you know or my daughter, you know no problem or here’s 10 bucks, no problem and, like i said, there’s always opportunity you know for add on which, from a business standpoint, you have your front front, end product and your back End product, okay, your front end is: is the initial product to get them, get them hooked and the back end is all the upsells, so they have that going for them, which is really good.
One downfall that i do see with this is with anything with children. Is going to be the moderation, okay um? This is an article that talks about the risks of it to children and so forth, and some of you know uh, i guess adults getting in on the game, and there was articles about avatars. You know doing inappropriate adult content, type things, and so you’re gon na get a little bit of bat of that bad wrath. Potentially anything that does also show anything with fighting or violence might steer away from certain parents. So that is a little bit of a concern. I don’t, i would see that to maybe have an effect if something bad happens: okay and um. You know it really gets in the media to really get things turning, but i don’t see this being a huge um. You know or a big roadblock, especially at the beginning, you’re just naturally gon na have parents saying you know what i don’t want my child on. You know something that is just connected to the internet, that i can’t fully monitor as well, which is no problem because it’s, not you know, nothing is for everyone, so that’s that’s, you know completely normal now, let’s get into the the number one thing that i really Want to talk about this is guys ipos. So the reason why i wanted to make you know this video is. I know that a lot of you know people that watch my channel have commented on.
Me are new to the stock market and when i say new to the stock market, i mean investing for or trading investing for a month six months since march uh, so maybe they’ve never been around in ipos. Maybe they heard about the airbnb they solid dash. But let me give you a couple of my experience guys, so i invested in the facebook, ipo and uh ripped out of the gate at 38. Bucks a share and i invested into it, and i i was huge on facebook and my parents. My parents were huge in the stock market, made a lot of money in stock market uh. You know my father’s taught me a huge wealth, a wealth of knowledge, okay uh, but he was not bullish on it because he knew his experience with ipos and so forth, and i lost a lot of money. It got down about 50 and it took a long time to kind of boost back up and i ended up selling for a loss at the time, which is a huge mistake of mine. Okay, just one of many um, but that kind of just rubbed me the wrong way of ipos okay, and so i wanted to kind of just give you guys a little bit. This is, you know the 10 biggest ipos that is expected to happen um or that happened okay, and this is going to be a huge. You know valuation uh as well, so roblox is going to be up there, it’s not going to be the top 10, but it is going to be up there as a large valuation.
So you can kind of look at these and just to see kind of what happened. Okay. So this is right here. This is airbnb, which was set to launch huge decline to me at the beginning. However, it came back strong all right, you look at doordash, same thing. Decline at the beginning came back strong, it’s kind of declined, which we know we own. We understand it goes back and forth the nasdaq selloff, which is right on this time, frame totally understandable. These are very two new ipos. We also look at snowflake, okay, this one kind of came out pretty sideways since then, when you look at lyft, which was a huge valuation, hard decline from the beginning. Okay, so i always try to look at you know what other and even those are in the same industries or what other stocks look like as a a forewarning of what’s going to happen, and one thing i do know about iapos is day. Traders are all over. It they’re very, very volatile out of the gate: okay um in certain senses, you know you, you will have early investors as well, which they get early pricing and then they’ll they’ll sell at the beginning all right. So that does play into effect, but one biggest key fact. I also want to point out to you: if you are thinking about getting into the stock, is if the company is going to do well all right right here if ipos can be overrated, if a company is a good investment, it’ll be a good investment.
Well, after the ipo, so just if this comes in it comes out of the gate. It skyrockets up don’t get caught chasing okay, i’ve seen a lot of that lately, especially with penny stocks. So everybody gets caught chasing and you know in the marijuana industry, the marijuana side and so forth. Don’T get caught chasing all right, it’ll stabilize it’ll come back even if it pops all right read this check. It out learn more about ipos rather than roblox as a company. The i learning about ipos is what’s going to happen for the first month or so the stock after that is going to be the fundamentals, the revenue where they’re forecasting and so in their growth. All right, so, if i can just give you that you know a little bit of advice personally, like i said i don’t plan on investing in this because i’ve gotten burned by ipos in the past, and i i don’t naturally, i will not invest in anything. That is going to be an ipo, maybe one day, if i get to be an early investor, then so forth great. But at this point in time it’s it’s it’s, not on my table, not to say i will not play this as a day trade. Okay, i do day trade every week i don’t day trade every day of every week, because i also run a business and i don’t have you know always you know the luxury to be able to focus on uh.
You know day trading because it’s much much more concentrated concentration is needed so um if you’re thinking about investing in the roblox. I hope this kind of helps you out guys and just remember that if the long run, if this is going to be a good company, it’s going to be a good stack for the long run and you don’t need to get into it right away, so guys That’S it for this video leave a comment down below.