MarketBites Daily Investment Commentary: Roblox: Virtual Money Printer? I Virgin Galactic’s Crazy Day

Stock Market Commentary for 5/12/2021:
  • +Volatility: Big Tech started the day plunging from rising inflation and valuation concerns, but by the end of the day they staged a miraculous comeback. The wild swings in the market signal that investors are a bit divided on what may happen next.
  • Inflation: Inflation remains the top issue on investors’ minds. Today, hedge fund mogul Ray Dalio, chimed in on inflation and stated that “the government is risking creating a bubble with all the money that’s floating around.”Supply Chain: Companies ranging from automakers to semiconductor giants, keep warning about supply chain setbacks and rising commodity prices that could derail the global recovery.

  • Stock Talk:

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Top Investment Story #1: Roblox Earnings
What is Happening?

Roblox stock surged 21.33% on Tuesday, after the company reported blowout earnings. CEO David Baszucki, sees a “massive opportunity” ahead for Roblox.

Why Does This Matter?:

The last time we wrote about Roblox, our biggest takeaway was that the company had to justify its valuation by maintaining momentum- even after kids return to schools. Roblox’s first earnings report as a public company was a step in the right direction. Even as some kids went back to school, Roblox still saw surging engagement growth on its platform!

What is Roblox?
Roblox is a platform that allows players to interact with friends in user-created, 3D digital worlds. It gives teens the tools to create their own games, which they can then make money from on the Roblox platform. The company went public on March 10, when it closed up 54% from its reference price.

Roblox by the numbers:

  • Average daily active users for the quarter hit 42.1 million, up 79% year over year.
  • Hours engaged hit 9.7 billion, up 98% year over year.
  • The company’s bookings—a form of adjusted revenue watched by analysts covering videogame firms—jumped 161%, to $652.3 million.
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CEO’s Promising Commentary:
CEO David Baszucki said in a news release that “The opportunity of what we’re building at Roblox is massive, and we will continue to make long-term investments as we build a human co-experience platform, that enables shared experiences among billions of users.”

The Takeaway:

Roblox will need to continue proving to investors that its “pandemic-winner” gaming platform can be a post-pandemic winner as well. The company’s first earnings report was a big step in achieving that goal.

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– By Raymond Kanyo

– Published in MarketBites Daily Newsletter

Meet the Authors
Top Investment Story #2: Virgin Galactic’s Crazy Day
What is Happening?

Trading on Virgin Galactic was halted briefly, at the beginning of Tuesday’s trading session. The stock dropped as low as 20% below the opening price, but recovered just under 1% higher.

Why Does This Matter?

Virgin Galactic experienced one of the craziest days we have seen from a stock lately. $SPCE fell a full 20% after the opening bell, due to an announcement late Monday. The announcement stated that the company would be pushing back its next test flight for its space tourism offering.

Virgin Galactic Executives told reporters that the firm would make its timeline more clear next week. Maintenance on the VSS Unity has been reported as complete. The roadblock stems from the firm’s carrier aircraft: the VMS Eve. Originally, maintenance on VMS Eve was scheduled for next October, but recent test flights have indicated that the issue may need to be addressed immediately. The company would like to avoid another aborted mission, such as the one in December of 2020.

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The stock’s volatility was heavily impacted by trade volumes. Reports state that $SPCE reached its average daily trade volume within 30-minutes of the opening bell on Tuesday. The stock closed about 1% higher, at $18.21 per share, down significantly from its all-time high of $60 per share  in February.

The Takeaway:

Virgin Galactic has hit bumps in the road recently. The stock once championed by Cathie Wood and Chamath Palihapitiya, risks losing its first-mover advantage in space tourism to Jeff Bezos’s Blue Origin, should it not recover soon.

By Jack Dunne

– Published in MarketBites Daily Newsletter

Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.

Raymond Kanyo
Product Manager & Investment Analyst

Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.

Jack Dunne
Investor Education Specialist
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