The $47B SMB public cloud spend market is a focused opportunity for new direct listing Roblox $RBLX, with attractive position in a competitive market

Price: $74.31
Market Cap: $40.9B
52 W L – 52 W H: $45 - $83.41
Shares Outstanding: 550M

$RBLX was founded in 2004 by David Baszucki and Erik Cassel in San Mateo, CA. They went IPO via direct listing on Mar 2021, and have 1000+ employees

On $RBLX, users can create and personalize an avatar, connect with friends, and explore a digital world of >20m user generated experiences in gaming, social media, entertainment, toys, and learning

$RBLX platform consists of: Client (user-facing); Studio (developer-facing); and Cloud (global infrastructure underpinning the platform).

$RBLX generates bookings through the sale of its digital currency called Robux (R$), which users can redeem for digital items in the Avatar marketplace or digital items that will enhance the user-experience

$RBLX ecosystem acts as an in-game economy where players buy virtual currency and creators are similarly compensated through virtual currency

There are over 200M experiences on $RBLX, with over 8M developers & creators engaging over 34M users

Each user must create an Avatar when joining $RBLX, which is portable across each experience on $RBLX and is a part of the social experience. ~20% of users change their Avatar’s appearance daily

$RBLX: Worldwide mobile gaming sector has 19% CAGR and reach $150B by 2023, with more than 2B players globally vs. 200M console gamers

$RBLX The market opportunity expands beyond mobile to the $154bn of total spending on game content as the $RBLX client is also available on console and PC

$RBLX was the Top-Grossing app in the US Gaming category in 2020. $RBLX is not a game nor is the company a game creator, $RBLX is a platform sitting on top of other gaming platforms

$RBLX The mobile gaming market is highly fragmented with approximately 10K developers globally. However, bookings is concentrated towards large publishers as the Top-25 accounted for 50% of spend in 2020

$RBLX is primarily played on mobile (72% of 2020 DAUs) in addition to desktop (25%) and console (3%)

$RBLX 154M per DAU is 4X higher than any other individual social network

$RBLX saw significant increase in total hours spend per DAU in 2020, but it is tapering off as kids go back to school post Covid

$RBLX has several opportunities to expand brand partnerships and deliver new revenue streams

Key Metrics to track include Cost of Revenue & Developer Exchange Fees

$RBLX bookings should grow at a 24% 3-year CAGR (2020-23)

$RBLX DAU growth and to a lesser extent ABPDAU (Avg Bookins Per DAU) growth will drive strong earnings through 2023

$RBLX Social Networking Sites and Online Marketplaces have historically seen an improvement in monetization in the year following an IPO

$RBLX Risks: Post Covid DAU engagement drop, demographic headwinds and higher developer fees

$RBLX Bull and bear thesis provides a good opportunity on weakness with $50 - $52 PT by Dec 2021

$RBLX Summary:
1. Platform for game dev and engagement, not just a game title developer
2. Strong user growth and engagement
3. Opportunities in China and partnership (brands) for Rev growth
4. Reasonably valued, with potential for gains
5. Gaming market growth in mobile

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