Can we make the case that in 2024 Roblox is able to grow by 20% CAGR? I believe that even if it can't grow by 20%, it will be extremely close to this figure. Now, this is where we get to the most critical and pressing question. What's more, if we make the assumption that Q2 2023 ends up growing against the same period a year ago by 20% CAGR, this would mean that H2 2023 would be up against much easier comparables and could with ease grow at close to 20% CAGR. This once again suggests that Roblox has what it takes to grow at 20% CAGR. That's clearly not a company that is in hyper-growth mode, but if Roblox can convince investors that it's stably growing at 20%, this would positively entice investors to reconsider the stock.įurthermore, bookings, which is a leading indicator of revenue growth rates, were up 23% y/y in Q1. Revenue Growth Rates Are More Stable Than They Seem All that being said, there are a few considerations that are weighing on its stock, which we'll turn our focus towards. The way that Roblox monetizes its platform is through in-app purchases. Its platform is free to play, allowing users to enjoy a lot of free content without any upfront cost. Roblox provides a social platform where users can connect with friends and join communities. Roblox allows users to create their own games, virtual worlds, and experiences using its platform. Nevertheless, I make the argument that if Roblox can convince investors that the business is still growing at 20% CAGR, investors will be keen to back this stock and this would see its multiple re-rating higher. Indeed, its underlying profitability leaves investors wanting more. I argue that Roblox ( NYSE: RBLX) is growing more stably than it may appear at first.īut I'm quick to note that the bull case is not without blemishes.
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