Online entertainment platform Roblox (NYSE:RBLX) offers gamers an immersive virtual world and an escape from reality for a while. The game has maintained strong appeal during the Covid-19 pandemic, and as a result, RBLX stock holders have enjoyed fairly strong returns.
Soon after the stock became publicly available for trading, I declared Roblox a clear winner among lockdown stocks. However, the stock seems to have stalled out lately, refusing to break out to fresh highs.
This may be frustrating to current and prospective RBLX stockholders expecting a massive bull run. In response to this, I would advise patience, as the next leg up could be right around the corner.
Besides, there’s recently released fiscal data to show that Roblox’s users are engaged — and this engagement could hopefully translate into strong revenues.
A Closer Look at RBLX Stock
Some folks might confuse a direct listing with an initial public offering (IPO). In a direct listing, the company doesn’t create new stock shares or raise any capital in the process.
Furthermore, in a direct listing, the current investors can start selling the already existing shares as soon as trading opens.
Prior to the stock’s public debut, the New York Stock Exchange had established a reference price of $45 for RBLX stock.
However, likely due to anticipation of higher prices in the near future, the shares actually began trading at $64.50 when the general public was able to buy and sell them.
The stock closed on that first day at $69.50 – an auspicious start, to say the least. And, the momentum continued as RBLX stock reached a 52-week high of $83.41 on April 13.
But then, the stock’s price action has been range-bound since that time. As of the afternoon of May 18, the shares are trading at around $74.87 apiece.
The bulls are undoubtedly looking for that big breakout moment. So, let’s do some digging and see if we can identify a potential catalyst or two.
On May 10, Roblox issued its first earnings release since the company’s direct listing.
As it turns out, there were a number of notable highlights from the first quarter of 2021, both good and bad.
I’ll go ahead and start off with the not-necessarily-so-good news. Roblox’s quarterly net loss attributable to common stockholders increased to $134.2 million, or 46 cents per share.
That’s certainly worse than the $74.4 million, or 44 cents per share, recorded during the a year-ago quarter.
If that didn’t cause you to run for the hills, then stick around for some positive news.
This is an item that immediately jumped out at me. Amazingly, users spent 9.7 billion hours on the Roblox platform during the first quarter of 2021.
And with that, engagement more than doubled in markets outside of the United States and Canada – indicating that Roblox’s reach is truly international.
Here’s another way to measure Roblox’s user engagement, along with the profitability this entails.
During the first quarter of 2021, Roblox recorded $652.3 million in bookings, a definite beat compared to the expected $575.8 million.
And here’s another way to view the increase in user engagement: Roblox reported 42.1 million daily active users during 2021’s first quarter, up 79% year-over-year.
At least in part, this was due to a whopping 111% increase in daily active users over the age of 13.
So, we’ve learned that Roblox is engaging users internationally, and kids love to use the platform.
Hopefully, these positive trends will continue throughout 2021, even as lockdown restrictions are lifted in various regions of the world.
RBLX Stock: The Bottom Line
I’ll concede that Roblox’s first-quarter results weren’t perfect. Investors should keep an close watch on the company’s bottom line in future earnings-data releases.
That being said, there’s reason to believe that a breakout moment could be in store for RBLX stock. After all, there’s no denying that user engagement is increasing, and that’s something the stakeholders can celebrate.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.