2 Reasons to Buy Roblox, and 1 Reason to Sell

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2023-06-09 13:22:49  • 3 mins

Shares of Roblox (NYSE: RBLX) are up 36% year to date. They are, however, still more than 60% off their all-time high, set back in 2021.

So, is now the time for investors to buy or sell Roblox stock? Let's look at two reasons to buy now, one reason to sell, and what it all means for Roblox.

First reason to buy: Reinvigorated growth

Roblox is a young company that operates an online metaverse-style gaming platform. As such, it's early in its business life cycle and is focused on growing its user base and revenue.

The company experienced an explosion of popularity during the pandemic, but that led to difficult year-over-year comparisons in 2022 that saw its growth rate cut to almost nothing.

Revenue in millions; year-over-year revenue growth rate in gray. Image source: Roblox Q1 2023 Earnings Presentation.

However, Roblox reported excellent revenue growth in its most recent quarter (for the three months ending on March 30, 2023). Revenue jumped to an all-time high of $655 million, up 22% year over year. That represents Roblox's first acceleration of growth in two years, which is crucial as it demonstrates the company can boost growth even as its user base has grown by leaps and bounds.

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