CNBC’s Jim Cramer 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 at Roblox right now, right here, although I would of course like to be at a much lower level, but that’s the real deal,” the Mad Money host said. “.
Roblox ended the trading session on Monday at $ 70 a share, 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 grew 85% in 2020 to 32.6 million, up from the 47% seen in 2019. The number of paying users doubled to 490,000.
Roblox earned $ 923.9 million last year, up 82% from $ 508.4 million in 2019.
“The economy of staying at home allowed them to explode, but in the future I bet they can keep a lot of that steering wheel-like momentum,” Cramer said.
Given his subscription service, Cramer argued that the shares should be judged on the price of the reservation. He noted that Wall Street analysts forecast $ 2.71 billion in reserves next year, meaning the stock will trade about 17 times in 2022.
“Pretty expensive, but still lined up with something like Snap and much cheaper than Unity Software, perhaps the closest comparison,” he said.
Cramer warned that stocks could see some volatility this year as the economy reopens completely and people reduce the amount of time they spend at home and in digital spaces.
“If he keeps climbing, though, he wouldn’t pay more than $ 83.50 for this, which is about 20 times next year’s bookings, at least until we have more visibility into how they see the rest of the year playing.” . He said.
“That said, that’s good. I think it’s worth dealing with a possible storm and I recommend buying one here,” he continued, “Then you could buy more when you go down, but only if you share my conviction.”