The video game industry has seen slower growth over the past few years, but this only makes Roblox‘s (NYSE: RBLX) performance stand out. The company’s user-generated content strategy and social interactions between users have created a vibrant gaming platform. After blowing the lid off second-quarter expectations, management now expects full-year revenue to grow between 22% and 25% year over year.
The stock is up about 10% after earnings, but is it still a buy at around $137? Factoring in the total shares outstanding, that equates to a market cap of $93 billion at the end of July. Roblox is a richly valued platform right now.
Whether it can deliver satisfactory returns from here will depend on how much of the $180 billion spent annually on video games it can capture over time, in addition to capitalizing on other opportunities like advertising.