The Motley Fool sent out another internal tease in their Investor Digest this week, as a pitch to upsell their readers to Tom Gardner’s Discovery: IPO Trailblazers service ($1,999/yr, no refunds)… so, naturally, we wanna know what it is, right?
We’ve covered this IPO Trailblazers newsletter a few times — it was started as one of the “portfolio” services at the Fool a year or two ago, with Tom Gardner putting in a million dollars to bet on newly-public stocks that he thinks have at least 400% upside, and the marketing launch was well-timed because it happened to hit in late February of 2020, and started out with their “FAZER” stocks (what they called the “next FAANG”). Turns out, those were mostly smaller tech growth stocks that were perfect for the pandemic “work from home/play from home” tech boom and did fantastically well last year (“>FAZER, in case you’re curious, is still also being used in some of their promos, and is still Fastly (FSLY), Appian (APPN), Zoom Video (ZM), Elastic (ESTC) and Roku (ROKU) — I own the “F” and the “R” in that group).
Should be a quickie today, the clues are pretty thin… but here’s how the pitch got my attention:
“THIS UNDER-THE-RADAR STOCK JUMPED 32% IN MAY – AND WE BELIEVE IT HAS PLENTY OF ROOM TO RUN!”
And this is apparently one of their favorites within this service…
“One of the top stocks on our Discovery: IPO Trailblazers portfolio’s watchlist jumped 32% in May! ….
“Now, for investors who wonder if they’ve missed the boat on this stock’s returns…
“We believe this stock is in the early innings! Especially since the company just went public in March, less than 90 days ago!”
OK, so a brand-new stock, has been doing well despite the market for IPOs and hot stocks getting a little bit less hot in February and March. What else? They tell us which sector it’s in…
“… investors are gobbling up stock in the company because it is starting to make headway into the $65.4 billion video game industry!
“… the demand for gaming is steadily growing.
“An estimated 244 million people in the U.S. play video games daily!”
So… what does the company do? More clues…
“… what’s unique about this stock is that although it is in the gaming industry, it’s not a game.
“It’s a platform that allows anyone to build games — and profit from them – whether they are developers or not!
“It’s literally like YouTube for gaming.”
That makes me feel old… I still remember when Yahoo and Mark Cuban were scoffing at how much Google overpaid for YouTube, and how worried investors were about the rich premium Eric Schmidt agreed to (they paid $1.65 billion for YouTube, which was less than two years old at the time, in 2006, but had already shot ahead of still-giant MySpace in user-generated video hosting). Even five or ten years later, people were arguing about whether YouTube would ever be profitable and earn back Google’s investment… which seems terribly quaint now. YouTube’s profitability is still not disclosed, but it is on pace to bring in at least $25-30 billion in revenue this year for Google (almost as much revenue as Netflix, for some context).
Apparently the connection to YouTube is that the platform enables developers to build their own games…
“You see, the reason why this company attracts over 32 million daily users, despite the pandemic, is because the content is not made in-house.
“Games are created from the users who know exactly what they want to play! And this keen insider knowledge keeps gamers coming back each and every day.”
But wait a minute, apparently it’s so super new that it’s not actually even a recommendation yet…
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“It is so green, that it’s still not an official recommendation here at The Fool.
“It’s completely under-the-radar!
“Which is why we believe investors have a chance to learn all about this stock before most investors take notice.
“It is one of four radar stocks recently released in our Discovery: IPO Trailblazers portfolio (which has beaten the market by 2x)!”
So what’s the stock? The Thinkolator quickly confirmed that this is, as many of you will have probably guessed already, Roblox (RBLX), the video gaming platform that is hugely popular with children and did indeed go public, to quite a bit of fanfare, just a few months ago. That was a direct listing, not an IPO (which means they registered the shares for trading on the exchange, but did not create and sell new shares for that purpose or get the backing of an investment bank), and launched with what they called a “reference price” of $45 on their first day, but the actual trading began at about $65… and, yes, the shares did “jump 32% in May” as teased (though from the recent highs, they’ve now fallen about 10%).
Here’s how the company describes itself: