Roblox poised to emerge as next meme stock with direct listing

Roblox poised to emerge as next meme stock with direct listing

Roblox Corp. is set to jump into the retail trading fray when the video game platform starts trading on the New York Stock Exchange later this week.

Shares are likely to be volatile as individual traders and Wall Street try to hash out a consensus on the company's value and future growth, a Bernstein analyst said. A survey of investors by the bank suggests the stock could fetch anywhere from $30 to $120 a share when it reaches the open market Wednesday.

"Most professional investors believe there will be heavy retail interest in this name, without much price constraint," analyst Todd Juenger wrote. The platform has seen its popularity surge among school-age children during the pandemic as in-person playdates were eschewed for online meetings within its many user-generated worlds.

Mentions of the stock on Reddit picked up ahead of the countdown to this week's listing. A 2020 target for an initial public offering was scuttled and eventually replaced with the plan for a direct listing after the company received funding from a $520 million private placement.

The San Mateo, Calif.-based company expects to expand its userbase by as much as 68% year over year in the first quarter of 2021 though that explosive growth is expected to slow to a single digit by the second quarter.

The slowdown in Roblox's growth and how that may be impacted as the U.S. reopens will likely be among one of the bull-versus-bear debates on the stock. But the number one controversy in the eyes of the investors surveyed by Bernstein was the online gaming company's push to bring in more adult users.

Less than half, or about 43%, of investors said Roblox would be able to successfully win over older folks, like the middle-aged parents of its current users.