Roblox: Bright Future Needs A Pause

  •  Roblox has rallied too far off the lows having doubled in only months.
  • The company still hasn't turned around the monthly metrics with the last bookings level down nearly 10%.
  • The stock is far too expensive back trading at near 10x forward sales targets.
After a big rally since the mid-June low, Roblox (NYSE:RBLX) has clearly run too far for the current market realities. The stock needs a pause to refresh. My investment thesis remains bullish over the long term, but the current stock view is much more Neutral with the gaming platform still struggling to top tough comps while the stock recently doubled from the lows.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Update - Sept. 9

Interactive digital ads is a promising revenue model for Roblox. The stock has definitely hit bottom, but valuation becomes an issue at $50. 

-Roblox stock (NYSE:RBLX) has tagged session highs, up 8%, as the company prepares to roll out ads on its platform.

-That marks a new revenue stream to help diversify the company's business, which to date has focused on selling virtual goods. It's not leaving that behind, Chief Product Officer Manuel Bronstein said: "We have an amazing transactional economy, and we will continue to invest in it."

-At its annual developer conference, Bronstein announced that the company has tried out online ads with partners including Warner Bros. and Vans, using an experimental "portal" ad format.

-That provides for users who interact with a brand to be automatically transported to the brand's virtual community in Roblox. Tests have left Warner Bros. "fascinated" with results, Bronstein said.

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