Online gaming platform Roblox made headlines today as it gapped up over 35% on earnings. Strong revenue growth despite a period of outage in late October was the catalyst for the amazing move. In addition, average daily active users is up over 20% compared to last year at this time. As online video games and the metaverse become a major theme, I believe some companies are positioned to profit drastically from this shift. For instance, NVDA, another stock I own, is likely to see fantastic revenue growth from an increasing demand for high-powered computers. META (Facebook) will enjoy a head start since it already has a very large userbase. While MSFT, and SE are also likely to benefit, I believe Roblox has the potential to be a true leader in this space. Remember, it already has millions of users gaming on its' platform who are interested in this type of online experience. I owned RBLX earlier this year but was stopped out without making a profit. I started a small pilot position pre-market today as I noticed that RBLX was set to gap up on large volume. I later added to my position as Roblox continued to rise. I have a stop loss in place below the low of the day to mitigate my risk.
It can be scary to buy a huge gap up like this, but it is important to put it into context. First, RBLX is extended on the daily chart, but it looks to be just emerging from a double bottom IPO base on the weekly chart. In addition, large moves like we are seeing in RBLX that occur on insane volume are not caused by your "Aunt Suzy" or "Cousin Mike" buying. It is large funds coming in to purchase the stock because they are bullish on the company's future. I too am bullish on Roblox's prospects for the coming months. Let's hope I'm right.
Risk right. Sit tight.
-Tom
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Full Disclosure: I currently own NVDA and RBLX.
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bases
bullish