Roblox’s stock price has nearly returned to its debut value, trading at around $70 after experiencing a pandemic-driven growth spurt followed by subsequent losses. The company went public via a direct listing on March 10, 2021, with an initial stock price of $64.50, eventually peaking at a record high of $134.72 on November 19, 2021.
Long-Term Growth Potential
Despite the decline in stock price, some experts believe that Roblox could bounce back in the long term. Mr. Gao, a company representative, stated, "The creator economy drives Roblox’s growth."
User-Generated Content
Roblox allows users aged 9 to 18 years old to create games without needing programming skills, utilizing drag-and-drop tools like Blox Studio. Since launching these features in November last year, about half a million people have created their own games.
- Earnings for Creators:
- Some creators earn millions from successful titles.
- Others may earn less than $100.
- "Some people can earn hundreds of thousands of dollars every month; some can earn tens of thousands; some can barely cover their living expenses," Mr. Gao explained.
Roblox does not take a commission from revenue earned by creators until they start earning above $250,000 annually.
Ease of Use and Safety Concerns
Gaming industry expert Dr. Ian Livingstone highlighted that Roblox stands out due to its user-friendly interface. "You need no technical knowledge whatsoever; you just pick up your phone, open Blox Studio, click-click-click, and boom! You’ve got your game ready within minutes—that’s fantastic!" he noted.
However, he raised concerns about parents potentially overspending on virtual items. Last year, over four billion hours were logged playing games on the platform, according to data from parent company Better Collective.
Partnerships and Transparency
Roblox has partnered with several major companies, including Nike, which launched virtual versions of shoes earlier this year. However, the company still needs to prove its business model is sustainable, as it is not yet breaking even.
Mr. Gao believes Roblox will continue to grow despite competition from platforms like Fortnite and Minecraft. He pointed out that unlike those platforms, all content on Roblox must go through moderation before being uploaded. "Our community self-regulates itself better than anyone else. We try really hard to ensure everything stays safe for everyone involved," he stated.
Parental Controls and Spending Limits
In addressing safety concerns regarding children spending large amounts on virtual items, Mr. Gao emphasized, "We’re very careful about how we handle user transactions. We don’t want kids spending all their allowance money because they love our game." He also mentioned that parents have control over what purchases are made and how much money their child spends.
- Parental Controls:
- Parents can set up accounts for their kids and establish spending limits.
Dr. Livingstone expressed concern about parents potentially allowing excessive spending, stating, "If I was worried about my kid spending £5000 worth of virtual currency, I would probably be worried if they were playing something like FIFA where you buy footballers."
Brand Partnerships and Values
Dr. Livingstone also highlighted the need for transparency regarding brand partnerships in schools. "If you’re going into schools and talking about brand partnerships, then maybe there should be transparency around who owns those brands. Is it someone who cares deeply about education, or is it just someone who wants brand awareness?"
In response, Mr. Gao stated, "We work very closely with our partners. They want us working together because we share values." When asked if any partners had been rejected for not sharing values, he confirmed, "There have been cases where we’ve decided not to move forward."
Conclusion
Roblox continues to grow but faces challenges ahead as it seeks to prove its business model is sustainable. While the platform has significant potential, investors should consider the competitive landscape and the company’s ability to navigate safety concerns and brand partnerships.
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