Roblox IPO – Dow Sets Record High

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Roblox IPO

Roblox (NYSE: RBLX), a video game platform, goes public today, and the stock surges 43% with more than $38 billion in market capitalization. The company CEO and co-founder, David Baszucki, describes Roblox as a community where people creating together. The video game platform is free and available through smartphones, tablets, and consoles, with the main revenue generation from Robux currency to purchase virtual objects.

The company posted $925 million in revenue in 2020 and grew by 89% from 2019. Roblox has 32.6 million active users and an age demographic of 13 – 24 years old. The company put a stringent control to protect the younger audience by ensuring the minor users’ privacy and safety. The company still reported a net loss and planned to increase revenue from advertising.

Robinhood, Coinbase, and Instacart are planning for IPO later this year.

Markets

Up/Down	Market	Price/Yield	Gain/Loss
	S&P 500	3,898.81	+ 0.60% (+23.37)
	Dow 30	32,297.02	+ 1.46% (+464.28)
	NASDAQ	13,068.83	+ 0.04% (-4.99)
	VIX	22.56	– 6.12% (-1.47)
	US 2-YR	0.16%	– 1 bps
	US 10-YR	1.53%	– 2 bps
	OIL	65.03	+ 0.93% (+0.60)
	GOLD	1,728.60	+ 0.46% (+8.00)
	Bitcoin	56,300	+ 4.58% (+2,468)

Stock Market

Dow hits a record high after gaining 464 points today after the House passes the $1.9 trillion stimulus package. The rise of interest rate fueled the market rotation in the last couple of days from the growth to value stocks. The long-term interest rate determines the discount rate for the net present value of the discounted cash flow. A higher interest rate makes the net present value of highly valuated stocks lower, making it less attractive for investment and bringing down the stock price.

Nasdaq loses the momentum after showing a record gain yesterday since November. Nasdaq drops 0.04%, while the broad S&P 500 index is up by 0.60%. The volatility index also drops sharply by 6.12%, indicating a less volatile trading session after the inflation number is less than expected. The stock market overreacted to the fear of inflation in the last couple of days which triggered a sell-off in the stock market.

Bond Market

US Treasury completes the auction of $38 billion of 10 years Treasury bonds without spiking any volatility. The yield drops two basis points which indicates a strong demand in the government’s bond. The Treasury Department has printed more than $3.6 trillion of government bonds to support the economy during the lockdown. Meanwhile, the inflation number meets the market expectation, which reduces the volatility index. The CPI reaches 1.7% in February and 1.4% in January. However, the core inflation drops to 1.3% in February from 1.4% in January.

Oil

Oil price jumps by 0.82% to $64.99 per barrel as demand increases to support OPEC’s economic recovery and decision not to increase production.

Gold

Gold jumps slightly higher to $1728 per ounce despite the drop of US Treasury bond yield. The popularity of cryptocurrency has decreased the demand for gold which reduces the volatility of the gold price.

Bitcoin

Bitcoin hits $56,300 and exceeds the $1 trillion market valuation. The cryptocurrency pioneer has rallied about 600% since last year, which split the outlook on whether it is a precarious bubble or a more significant bull run in the future. Bitcoin ETF becomes a great alternative to trade bitcoin due to its convenience and liquidity. BTCC is the first Bitcoin ETF in the market and has gain popularity among traders for hedging purposes.

Photo by Alvaro Reyes on Unsplash