CNBC’s Jim Cramer on Monday endorsed the purchase of shares of Roblox, the online gaming company that began trading in public earlier this month.
“You have my blessing to hold a position here in Roblox now, although of course I want it on a much lower level, but that’s the right thing to do,” said the ‘Mad Money’ host.
Roblox ended the trading session on Monday at $ 70 per share, an increase of 8.5% since its direct listing on the New York Stock Exchange almost two weeks ago. The San Mateo, California company, founded in 2004 by Erik Cassel and David Baszucki, is valued at more than $ 38 billion.
“I have to tell you, I really like this business model,” Cramer said.
The platform is especially popular among younger generations who go to the site to build, share and play video games. According to Roblox, daily active users grew by 85% in 2020 to 32.6 million, compared to the 47% growth it saw in 2019. The number of paying users has more than doubled to about 490,000.
Roblox brought in $ 923.9 million last year, an increase of 82% from the $ 508.4 million it recorded in 2019.
“The stay-at-home economy has caused them to break out, but going forward I bet they can maintain a lot of this flywheel-like momentum,” Cramer said.
Given its subscription service, Cramer argued that the stock should be judged on a price-to-booking basis. He pointed out that Wall Street analysts are predicting $ 2.71 billion in discussions next year, meaning the stock has booked about 20 times 2022.
“Fairly expensive, but still in line with something like Snap and much cheaper than Unity Software, perhaps the best comparison,” he said.
Cramer warned that the stock could see some volatility this year as the economy reopens and people reduce the amount of time they spend at home and in digital spaces.
“However, if it continues to climb, I will not pay more than $ 83.50 for this amount, which is about 20 times next year’s bookings, at least not until we gain more insight into how they see the rest of the year play out. not, “he said.
That said, it’s a good one. I think it’s worth enduring a possible storm, and I recommend buying a little here, “he continues,” then you can buy more on the way but only if you share my conviction. “