Blox by blox
An unstoppable gaming empire?
Good morning, button mashers. This is your Stock Market Rundown for August 14th, 2023. Thanks for joining me for another week of tomfoolery. Let’s dig in:
TODAY’S TOP STORY: BRICKS, BLOCKS, AND BYTES 🖥️
Roblox launched in 2006 as software to teach children basic game design. By 2016, it had exploded in popularity thanks to giving game creators—including kids—the ability to make money off what they built. Think of it as a digital version of the neighborhood lemonade stand. (Though, these days, kids running a lemonade stand would probably get ticketed for not having appropriate permits).
Pearl-clutching critics complain that Roblox is built on exploitative child labour, but heck, the kids are learning valuable skills like coding and marketing. It’s not like they’re toiling in the mines. (That’s a totally different game—Minecraft.)
Despite zero advertising, Roblox spread virally and become the #1 platform for internet-addicted nine-year-olds. It went public via IPO in March 2021, and today half of all US children have a Roblox account. The company makes money via sales of virtual currency, Robux, which I’m guessing is typically purchased using a credit card “borrowed” from mom’s purse.
Roblox recently reported Q2 results, and despite daily active users being up a whopping 25%, profitability suffered due to spending exceeding sales growth, so the stock tanked. Could this be a buying opportunity? Be careful: kids are fickle. The graveyard of defunct game platforms has many corpses, from Sega Saturn to Habbo Hotel.
Fad or not, Roblox is a phenomenon: during Q2, its addicted prepubescent user base spent 14 billion hours on the platform. The only way mom is getting little Billy off Roblox is by locking his laptop in the credenza.
SO WHAT ELSE IS GOING ON?
Beyond Meat, the food manufacturer known for processed sludge patties made of pea protein and canola oil, is suffering from plummeting sales as consumers tire of overpriced fake food that tastes like cardboard. Meanwhile, I figured out how to make Beyond Meat burgers palatable: add bacon and cheese.
Pinterest, the website where girls do deep-dive due diligence on wedding centerpieces, recently reported monthly active users jumped 8% year-over-year to 465 million. That’s millions of people who will be devastated when their Minion Cake looks nothing like the Pinterest pin.
Sam Bankman-Fried is back in jail again after having his bail revoked. His screw-ups include leaking his ex-girlfriend’s diary to the New York Times, and using an encrypted VPN to watch the Super Bowl—both no-no’s under his bail provisions. How exactly did a guy this dumb get away with a billion-dollar scam?
Etsy, an ecommerce platform where you can buy vital household items like a Shrek Buddha or Chicken McNugget keychain, reported a better-than-expected quarter. But the stock slid on weak guidance: execs are worried shoppers facing student loan payments might be less likely to splurge on items like “Danny DeCheeto” fridge magnets.
That’s it for today, see you bright and early tomorrow. Yours in capitalism, The Axe