RBLX - Roblox: User Growth Slows While Profitability Efforts Raise Ethical Concerns
2024-04-25 23:05:46 ET
Summary
- Roblox's stock has lost around 8% of its value since I covered it in early 2023.
- The company's growth rate is slowing, and it has not proven its ability to monetize its platform profitably.
- Roblox's profitability is questionable, with high stock-based compensation and declining profit margins.
- For Roblox to earn a profit, it would likely need to advertise to children or raise microtransaction spending, which raises ethical concerns.
- Since Roblox users (many under 13) spend an average of 36 days on the platform per year, it seems more likely that usage will decline instead of continuing to rise.
In early 2023, I published a bearish outlook for the children's online gaming giant Roblox ( RBLX ). Since then, the stock has lost around 8% of its value, with a wide range between $25 per share and the upper $40s. The stock is currently noted by Seeking Alpha's Quant rating system at a high risk of performing poorly, due to its poor margins . Analysts remain very mixed on the stock, with many bullish, bearish, and neutral takes. In my view, such stocks are often those at the highest risk of increased volatility, as there is little consensus on their future potential....
Roblox: User Growth Slows While Profitability Efforts Raise Ethical Concerns