There weren't any S&P 500 earnings reactions on Monday because of Labor Day in the United States, but the gaming and esports industry has our attention.
This industry is undergoing a true renaissance. What was once seen as a niche corner of entertainment is now in a booming secular uptrend.
Esports events fill arenas, streaming platforms attract millions of daily viewers, and gaming franchises consistently generate more revenue than Hollywood blockbusters.
It has become a cultural and financial force that rivals music and film. At the center of this rise is an ecosystem of platforms, developers, and publishers that are driving both engagement and monetization to levels we have never seen before.
August's monthly candlestick confirmed this strength.
The VanEck Gaming and eSports ETF $ESPO, which holds many of the leaders in this industry, closed August at a new all-time high:
The VanEck Gaming and eSports ETF broke out of a multi-year base late last year / early this year and ripped past the 161.8% extension level like it didn't even exist.
This breakout is a testament to the technical and fundamental momentum that permeates the entire space. We don't think it's going away anytime soon.
We're looking at the 261.8% extension level as the next logical target for ESPO.
Among all the holdings in this ETF, Roblox $RBLX stands out as the top performer.
It's the largest position in ESPO, and it's producing some of the most extraordinary growth numbers in the stock market today.
They aren't just a gaming company anymore...
The company has grown into a social hub and a virtual economy where people interact, create, and spend real money.
The latest earnings report, released on July 31, gave us a fresh look at how quickly they're scaling.
Roblox's growth in Daily Active Users has been nothing short of extraordinary. They have now surpassed 100 million DAUs, a figure that few digital platforms in history have ever achieved.
The company reported a 41% year-over-year increase in this key performance indicator, a remarkable achievement given its scale. Growth often slows as a platform becomes larger, yet they are accelerating.
That acceleration signals powerful network effects and brand strength. Every new user adds more value to the ecosystem, attracting both players and developers.
If DAU growth indicates the number of people coming to the platform, hours engaged show how deeply they are engaging.
Roblox users spent over 27 billion hours on the platform in the quarter, representing a 58% increase from the same period last year. That growth outpaces DAUs, proving that Roblox is not only adding users but also engaging them more effectively over time.
The chart makes the story crystal clear. The number of hours engaged had been rising steadily, but in the last two quarters, the slope has steepened dramatically.
This acceleration tells us they are winning the battle for attention, which is the most valuable currency in the digital economy. More time spent means more opportunities to monetize through Robux purchases, advertising, and creator activity.
It also shows that they have become more than just a casual pastime. The platform is becoming an integral part of users’ daily routines, a virtual world where they socialize, create, and transact.
Roblox generates over $1 billion in revenue each quarter. As you can see, the year-over-year growth rate has slowed compared with previous years, which could be seen as a concern at first glance.
However, that interpretation ignores how their revenue is recognized. Under GAAP rules, revenue is spread out over time as users spend their Robux. That means the revenue chart often lags behind the true demand picture.
Even so, the steady climb to fresh highs shows the underlying health of the business. Roblox is scaling into billion-dollar revenue quarters while maintaining one of the fastest growth rates among large-cap companies in the gaming space.
Bookings captures the value of Robux purchased upfront, without waiting for recognition in the accounting records.
The key performance indicator surged to $1.44B in the most recent quarter, representing 51% year-over-year growth. That growth rate is well ahead of DAUs, proving Roblox is not only adding more users but also monetizing them more effectively.
The bookings chart shows a dramatic upswing, with the most recent quarter producing the steepest jump yet. Growing at this pace indicates a rise in spend per user and increased adoption of premium experiences within the platform.
It is difficult to overstate the power of this trend.
Roblox is building a thriving virtual economy where users are both deeply engaged and willing to spend.
The stock chart mirrors the strength of the fundamentals:
Roblox has completely retraced its decline from late 2021 to early 2022, and the bulls are looking to surpass the peak of the prior cycle.
If and when RBLX closes above 142, the path of least resistance will decisively shift from sideways to higher for the foreseeable future.
The alignment of technical strength and fundamental momentum makes Roblox one of the most compelling names in the entire market.
Roblox is the hottest growth story in gaming today, and it's positioned to lead this booming industry into the future.
Happy fishing
-The Beat Team
P.S. All Star Charts is constantly looking for trade ideas in stock market leaders like Roblox.
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