RBLX - Embedded Expectations Analysis - 2021 08 02
Roblox Corporation (RBLX:USA) currently trades at a substantial premium to UAFRS-based (Uniform) assets, with a 108.0x Uniform P/B. At these levels, the market is pricing in expectations for profitability to positively inflect, but management may have concerns about Roblox platform opportunities, payer conversion rates, and developer engagement sustainability.Specifically, management may lack confidence in their ability to generate top line growth, expand margins, and continue converting users to payers. In addition, they may have concerns about their strategy to generate revenue from advertising, the unit economics of the business, and their investments into new products and technology. Furthermore, management may be overstating the advertising, educational, and growth opportunities for Roblox, as well as its potential to create and support immersive 3D experiences. Moreover, they may have concerns about the sustainability of new developer additions, rising developer expenses, and the sustainability of developer engagement on the platform.
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