Opinions
Bryn Talkington
Roblox Corporation
RBLX-N
BUY
Feb 10, 2023
Stock price when the opinion was issued
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RBLX is up 42% this year and will probably do well if rates pivot and the market turns back into a 'risk on' mode. It has about $500M net cash ($2.1B cash, $1.6B debt), and does have positive cash flow ($434M in the trailing 12 months, $369M in 2022). Sales are expected to show 50% growth this year and at least 15% in 2024 and 2025. It is still losing money but per share losses are expected to decline ($1.88 this year, then $1.32, $1.11). Insiders own 3.5% and have been minor net sellers in the past six months. We would, today, rate it a HOLD.
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RBLX is up 42% this year and will probably do well if rates pivot and the market turns back into a 'risk on' mode. It has about $500M net cash ($2.1B cash, $1.6B debt), and does have positive cash flow ($434M in the trailing 12 months, $369M in 2022). Sales are expected to show 50% growth this year and at least 15% in 2024 and 2025. It is still losing money but per share losses are expected to decline ($1.88 this year, then $1.32, $1.11). Insiders own 3.5% and have been minor net sellers in the past six months. We would, today, rate it a HOLD.
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Most customers are under 18. User growth is accelerating, up 25% YOY. They are big in the US, sort of in Europe, but are expanding in south-east Asia, namely Indonesia. They have commerce API integration in the early stage of advertising that they will put on their platform. They have 600 million monthly users. Are generating lots of cash, but also spending that. They have a net lost. A great business that's growing over 30% in revenues and bookings. Their expect their community to generate $1 billion in creator earnings this year.
(Analysts’ price target is $81.08)
Likes it. Earnings are coming and the street wants to know their daily active users number. In December, they had 65 million, up 18%, but the average booking for daily users is $7. These shares range between $30-40, so she sells calls close to $40, then closes it out closer to $30. They have cash flow and revenues, but remain in the growth stage.