Roblox: A Pricey Play In The Virtual World

Sep. 30, 2024 12:15 PM ETRoblox Corporation (RBLX) Stock
(6min)

Summary

  • I recognize Roblox's impressive growth trajectory, but I remain cautious given its elevated valuation.
  • I see long-term potential for Roblox, but I'd rather wait for a more attractive entry point.
  • I acknowledge that Roblox's free cash flow is improving, but other companies offer better risk-reward profiles.
  • I believe the gaming sector is competitive, and Roblox's valuation leaves little room for error.
  • Looking for a helping hand in the market? Members of Deep Value Returns get exclusive ideas and guidance to navigate any climate. Learn More »

Roblox Headquarters

JasonDoiy

Investment Thesis

Roblox Corporation's (NYSE:RBLX) near-term prospects are starting to show positive dynamics. And indeed, there's a lot to like about this investment. But having to pay up around 43x next year's free cash flow withers up my appetite for

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This article was written by

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.

With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months.

Through his 10+ years analyzing countless companies, Michael has accumulated outstanding professional experience in tech and energy and a following of over 40K on Seeking Alpha.

Michael is the leader of the investing group

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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