Jim Cramer of CNBC on Monday approved the purchase of shares in Roblox, the online gaming company that began trading publicly earlier this month.
“You have my blessing to take a position in Roblox right now, right here, although I would, of course, like it at a much lower level, but this is the real deal,” the “Crazy Money” host said.
Roblox closed the trading session at $ 70 a share on Monday, up 8.5% from its direct listing on the New York Stock Exchange almost two weeks ago. The San Mateo, California-based 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 the younger generations, who go to the site to build, share and play video games. Roblox said daily active users increased by 85% in 2020 to 32.6 million, up from 47% in 2019. The number of paying users doubled to about 490,000.
Roblox brought in $ 923.9 million last year, up 82 percent from its $ 508.4 million in 2019.
“The home economy has allowed them to break out, but in the future I bet they can keep a lot of that momentum going,” Cramer said.
Given the subscription service, Cramer argued that the stock should be valued on the basis of the booking price. He pointed out that Wall Street analysts forecast $ 2.71 billion in bookings next year, meaning the stock is trading about 17 times in 2022.
“Quite expensive, but still aligned with something like Snap and much cheaper than Unity Software, perhaps the closest comparison,” he said.
Cramer warned that the stock could see some volatility this year as the economy reopens fully and people reduce the time they spend at home and in digital space.
“If it continues to climb, though, I wouldn’t pay more than $ 83.50 for it, which is about 20 times next year’s bookings, at least until we get more visibility into how I see the rest of the year playing ” he said.
“That being said, this is a good one. I think it’s worth resisting a possible storm and I recommend you buy them right here,” he continued. . “