Roblox Corporation (RBLX)

He likes it, but he prefers Unity.

It's very expensive in PE terms. It's a risky stock and acting poorly nowadays. [Note: audio problems]

It did respectably well when it debuted 2.5 months ago, then it was flopping-and-chopping for a while. He recommended it shortly after that debut as the stock found its footing. It has a monster move last week, and popped 8% more today. It now has great momentum and yes, it's that good. They offer free services, but also subscription ones. He likes this tiered approach. After Q1 results, RBLX shattered the perception that it's a Covid stock. Users generate content and Wall Street likes these companies. Thousands of live-support employees help users, which is far better than other platforms. Numbers: average daily active users was up 79% YOY and hours engaged was even higher, driven up overseas users and children. Free cash flow is over 300% YTD. They won't offer annual guidance yet, though. Use is not slowing at all. Users rose one million between March and April 2021 alone, so the reopening isn't hurting them. Kids love the platform and so do parents. Their launch in China is already beating their expectations. No, RBLX is still not profitable and still burning cash to grow their business. Also, their high cash flow is encouraging. This has a lot more room to run. Buy a small position right now to start.

It reports Monday. It's your chance to get into this before this stock reaches full valuation. He likes this a lot. It's a smart company.

A few weeks ago it went public via SPAC. With its platform, kids build videogames onlines; users can build 3D digital worlds that they can share with friends online, like digital Lego. The stock has been choppy, but has mostly held up in a hostile tech environment. Users love this platform. RBLX has benefited from lockdowns as parents encourage their kids to play with this for hours; Roblox use by kids accelerated. It's a great growth story. The platform even has its own digital currency where users sell their own content and the company takes a cut; the user-developers earned $330 million on this platform. The money is real. RBLX also has a subscription service that lets users buy discounted games and access special features. What really sets RBLX apart is that it's a safe plaec for kids online; more than half the users are under age 13 and the company strives to keep it safe (i.e. answering each complaint under 10 minutes). Roblox has 39% bookings growth in 2019, 171% in 2020. Revenue growth jumped from 50% to 82%, driven by an 85% rise in daily active users in 2020. Paid users number half-million, a 166% rise YOY. And yet, Roblox keeps losing money as it continues to invest back into the platform. Sees strong growth in Asia-Pacific and Europe. But he's not worried about negative earnings. Their free cash flow has gotten a lot better: $14.5 million in 2019, then $411 million in 2020. Likes the business model. Roblox claims current users will stick with them as they age. The biggest negative is that last year's numbers can't repeat as the economy normalizes, but the company admits this.

A popular IPO today It's trading like a growth stock, but it isn't. It's had ridiculous growth, but things are likely going to wane. He'd rather look at EA. Pay for growth when it's there, not in the rear-view mirror.

Has a superb IPO today It's high growth and high valuation. He considered buying it today, but wants to see it settle. Wait a bit.