RBLX - Roblox: Erosion In Shareholder Equity May Negate Its High Growth Potential
2024-03-13 16:00:00 ET
Summary
- RBLX is still not a Buy, despite the double beat FQ4'23 earnings call, promising FY2024 guidance, and projected top-line growth at +20% through 2027.
- Much of our bearish sentiments are attributed to the management's over reliance on stock-based compensation and share dilution.
- Despite the relatively healthy balance sheet and expanding free cash flow generation, shareholder equity continues to be eroded, negating RBLX's high growth potential.
- Anyone hoping for generative AI, social media, and advertising tailwinds must also be very patient, since these are still early days.
- Combined with the eye-watering FWD valuations, RBLX is overvalued here and is likely to be overvalued moving forward.
We previously covered Roblox Corporation ( RBLX ) in January 2023, discussing why it remained a speculative stock, with the management's focus on delivering high growth implying its inability to generate positive net income profitability....
Roblox: Erosion In Shareholder Equity May Negate Its High Growth Potential