Roblox: Not All Users Are Equal

Update - Jan. 17

Huge month from Roblox with bookings in Dec. up nearly 20%. The stock was a buy in the $20s, but Roblox gets fully priced in the upper $30s. 

-Roblox shares surged almost 14% Tuesday as investors responded positively to the gaming platform company's strong December results.

-Prior to the start of trading, Roblox said that in December it had 61.5M daily average users [DAU], up 18% from the same month in 2021, while engaged hours of users climbed 21% from a year ago, to 4.7B hours.

-Roblox said its revenue continued to show the effect of a strengthening U.S. dollar against currencies such as the British pound and the euro. In addition to its overall revenue being impacted by currency levels, Roblox (RBLX) said its average bookings were between $6.99 and $7.14 per daily user, which, depending on final results either slipped by 1% or rose as much as 1% from December 2021.

-Total bookings for the month were strong, as Roblox said bookings came in between $430M and $439M, a gain of 17% to 20% on a year-over-year basis.

Update - Dec. 15

Bookings for November would've been up 10%-12% on a constant currency basis. The stock is down 10% in pre-market trading due to the dip from a 20% growth rate in Oct. As mentioned in the article, Roblox is very interesting in the upper $20s. 

November 2022 Metrics
-Daily active users (DAUs) were 56.7 million, up 15% year-over-year.
-Hours engaged were 3.9 billion, up 10% year-over-year.
-Estimated revenue was between $190 million and $193 million, up 1% - 3% year-over year.
-Estimated bookings were between $222 million and $225 million, up 5% - 7% year-over-year.
-Estimated average bookings per daily active user (ABPDAU) were between $3.92 and $3.97, down 7% - 9% year-over-year.

Original article published on Dec. 13

• Roblox grew October bookings at 20% on a constant currency basis versus initial October 2021 bookings.
• The global gaming platform has a major 2023 catalyst with expansion into immersive advertising.
• The stock is more appealing down trading at 6x forward EV/S targets.
• This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More » 

For a couple of years now, Roblox (NYSE:RBLX) has simply been a story of when the company would cross the threshold where a higher user base would finally top the strong spending during initial covid lockdowns. The global gaming platform has reached that point with both Q3'22 and October bookings back to growth mode. My investment thesis remains Bullish on the stock as the company rolls into easy comps in 2023.

Read the full article on Seeking Alpha. 

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