RBLX - Roblox: Cash Flow Mirage

2024-05-01 06:07:10 ET

Summary

• Roblox's recent performance has been solid, as its business is not heavily impacted by macro conditions.
• Solid user growth and low sales and marketing expenses suggest that Roblox's platform remains healthy.
• Roblox's cost structure is problematic, and it is not clear if or when this will be resolved.
• AI enabled moderation and scaling of the advertising business are probably the most viable near-term paths to improved profitability.

Roblox's ( RBLX ) performance has stabilized in recent quarters, with the company returning to robust growth and its cash flows improving. Despite this, the stock has struggled in recent months, and absent a change in app store policies, it is difficult to see Roblox's prospects changing materially....

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