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 () 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
Roblox falling 21% today is the exact pause SFC was looking for. The chart looks ugly here, so one should wait for to make sure the prior lows hold.
As predicted, the downgrade last week was the final stages of the bear market. Roblox has now turned the quarter back into growth mode after absorbing the covid pull forwards. Though, the stock isn't exactly cheap at 7x forward sales.