I recently wrote an article on Reddit ( RDDT ), arguing that the company has all the ingredients for an ultra-high-quality business, qualities that I also see in the Mag 7 stocks. Specifically, I pointed out:I have worked in investment banking for almost a decade, before I decided to fully turn my attention to the stock market and my private investments. As a contributor to Seeking Alpha, my articles have a focus on accounting and financial analysis. I am an ex-colleague and close friend of Cavenagh Researc ...

Michael Wiggins De Oliveira is an inflection investor. This means buying into cheap companies at the moment when their narrative is changing and the business is on a path toward becoming significantly more profitable over the next year.With a focus on tech and “the Great Energy Transition (including uranium)”, Michael runs a concentrated portfolio with approximately 15 to 20 stocks and an average holding period of 18 months. Through his 10+ years analyzing countless companies, Michael has accumulated outsta ...

The metaverse gaming company is still a polarizing stock.Roblox (RBLX 0.19%) has been a divisive stock since its public debut four years ago. The gaming platform company's stock opened at $64.50 per share on the first day, and it more than doubled to a record closing price of $134.72 on Nov. 19, 2021.But as of this writing, Roblox's stock trades at about $56. Its investors fled as it lapped its pandemic-driven growth spurt, racked up more losses, grappled with safety and regulatory issues, and rising intere ...

Roblox (RBLX 1.51%) operates a hugely popular gaming platform that attracts millions of users every day. With a staggering 40 million games on Roblox, there's a ton of content out there to keep people coming back. It also has a ton of promise when it comes to monetizing its platform via ads. Despite all this potential, however, it still carries plenty of risk for investors. The company isn't profitable. A recent short-seller report questioned how the company handled the matter of keeping kids safe on its pl ...

Group 1: Growth Stocks and Investment Opportunities - Growth stocks present a significant opportunity for building lasting wealth, particularly by investing in companies that are tapping into large markets [1] - Long-term investors can benefit from focusing on brands and experiences that attract younger demographics, rather than solely chasing hot tech stocks [2] Group 2: Roblox - Roblox is experiencing strong momentum with a 44% increase in stock price over the past year, supported by a robust long-term growth strategy [3][6] - The platform boasts over 85 million daily active users, a 19% year-over-year increase, and users spent over 18 billion hours on the platform last quarter, indicating high engagement [4] - Roblox generated $641 million in free cash flow on $3.6 billion in revenue last year, with management targeting a 10% capture of annual video game spending, potentially leading to 20% annual top-line growth [6] Group 3: Take-Two Interactive - Take-Two Interactive, known for the Grand Theft Auto series, has seen a 38% stock increase over the past year, driven by anticipation of new game releases [7] - The upcoming launch of the sixth installment in the GTA series, along with new titles in established franchises, is expected to be transformative for the company's growth [8] - Management projects full-year revenue between $5.57 billion and $5.67 billion, with consensus estimates predicting revenue of $8.3 billion by fiscal 2027 and adjusted earnings per share of $9.22 [10][11]

Core Insights - The performance of Roblox's international operations is crucial for understanding its financial strength and growth potential [1][2] - The company's total revenue for the quarter ending December 2024 was $1.36 billion, reflecting a 20.8% increase year-over-year [4] International Revenue Analysis - Geographic Revenue from Asia-Pacific, including Australia and New Zealand, accounted for 7.58% of total revenue, translating to $103.19 million, which was a surprise decrease of -4.82% from expectations [5] - Geographic Revenue from Europe generated $182.86 million, constituting 13.43% of total revenue, exceeding expectations by +3.07% [6] - Geographic Revenue from the Rest of the World contributed $79.25 million, making up 5.82% of total revenue, surpassing estimates by +14.87% [7] Future Revenue Projections - Analysts project total revenue of $1.14 billion for the current fiscal quarter, indicating a 23.4% increase from the prior year [8] - For the entire year, total revenue is forecasted at $5.28 billion, a 20.8% improvement from the previous year, with regional contributions expected from Asia-Pacific (9%), Europe (14.7%), and Rest of the World (5.7%) [9] Market Dependency and Stock Performance - Roblox's reliance on global markets for revenue presents both opportunities and challenges, making international revenue trends a key indicator for future performance [11] - The company's stock has increased by 1.9% over the past month, while the broader market and its sector have seen larger gains [14]

User Engagement Metrics - Daily Active Users (DAUs) are defined as users who log in and visit Roblox on a unique registered account on a given calendar day, with DAUs for a specified period being the average for that period [22]. - Total hours engaged are calculated as the aggregate of user session lengths, reflecting user engagement on the platform [26]. - Average Bookings per Daily Active User (ABPDAU) is calculated by dividing bookings in a given period by DAUs for that period, providing insight into monetization across users [33]. - The average new monthly unique payers are calculated as the average of user accounts making their first payment during a month, with potential for multiple counts due to multiple accounts [34]. - The average returning monthly unique payers are defined as accounts making payments in the current and any prior month, also subject to multiple counts [35]. - The monthly repurchase rate is calculated as returning monthly unique payers divided by the sum of the prior month's new and returning monthly unique payers [36]. Financial Performance - Total revenue for the year ended December 31, 2024, was $3,601,979,000, representing a 28.7% increase from $2,799,274,000 in 2023 [490]. - The net loss attributable to common stockholders for 2024 was $935,384,000, compared to a net loss of $1,151,946,000 in 2023, indicating a reduction in losses [490]. - Cash and cash equivalents increased to $711,683,000 as of December 31, 2024, up from $678,466,000 in 2023, reflecting improved liquidity [487]. - Total current assets rose to $3,728,030,000 in 2024, compared to $3,275,413,000 in 2023, marking a 13.8% increase [487]. - The total liabilities increased to $6,966,349,000 in 2024 from $6,099,452,000 in 2023, indicating a 14.2% rise [487]. - Research and development expenses for 2024 were $1,444,207,000, up from $1,253,598,000 in 2023, showing a 15.2% increase [490]. - Developer exchange fees increased to $922,821,000 in 2024, compared to $740,752,000 in 2023, reflecting a 24.5% rise [490]. Revenue Recognition and Deferred Revenue - Bookings represent sales activity in a given period, primarily from virtual currency sales, and are recorded in deferred revenue until recognized as revenue [29]. - Deferred revenue rose to $795,422,000 in 2024, up from $742,294,000 in 2023, indicating growth in user engagement and future revenue potential [499]. - The Company recognizes revenue from the sale of consumable virtual items as they are consumed, while revenue from durable virtual items is recognized ratably over the estimated period of time the items are available to the user [515]. - The Company defers contract costs that are direct and incremental to obtaining user contracts, which consist of payment processing fees charged by third-party payment processors [518]. Acquisitions and Goodwill - The company acquired Speechly, Inc. for a total consideration of $10.1 million, which included $4.8 million paid at acquisition and $5.3 million held back pending post-acquisition conditions [590]. - The allocation of the purchase price for Speechly included $2,800 in developed technology and $7,536 in goodwill, which is not deductible for income tax purposes [591]. - The acquisition of Byfron Technologies, LLC was completed for a total consideration of $9.6 million, with $7.603 million paid in cash and $2 million held back for 18 months [592]. - Goodwill recognized from the Byfron acquisition amounted to $3,882, with identified intangible assets valued at $5,500 [593]. - The Hamul, Inc. acquisition was valued at $19.3 million, consisting of $9.2 million in cash and $4.0 million in common stock, along with $6.129 million in replacement awards [594]. Cash Flow and Investments - Net cash provided by operating activities was $822,316,000 in 2024, significantly higher than $458,180,000 in 2023 [499]. - The company invested $4,642,540,000 in purchases of investments in 2024, compared to $4,591,974,000 in 2023 [499]. - As of December 31, 2024, total cash equivalents and investments amounted to $3,943,785, a slight increase from $3,187,922 as of December 31, 2023, representing a year-over-year growth of approximately 23.7% [587]. Debt and Liabilities - The net carrying amount of the 2030 Notes was $991,671,000 as of December 31, 2024, with an unamortized issuance cost of $8,329,000 [611]. - Total interest expense related to the 2030 Notes was $40,121,000 for the year ended December 31, 2024 [612]. - Future interest and principal payments related to the 2030 Notes are projected to total $1,213,120,000, with $38,750,000 due annually from 2025 to 2029 [614]. - As of December 31, 2024, the company has total non-cancellable contractual purchase obligations amounting to $325.949 million, with $233.121 million due in 2025 [616]. Legal Matters - A putative class action was filed against the company on August 1, 2023, with claims related to minors using third-party virtual casinos to gamble Robux, and the litigation is ongoing [619]. - The company intends to defend itself vigorously against all claims asserted in ongoing litigation, but is currently unable to estimate potential losses [621]. Stock and Equity - The company has reserved a total of 177.567 million shares of common stock for future issuance as of December 31, 2024, compared to 175.012 million in 2023 [627]. - The company has authorized the issuance of 100 million shares of convertible preferred stock with a par value of $0.0001 per share [624]. - The company’s 2020 Equity Incentive Plan reserves 60 million shares of Class A common stock for future issuance, with automatic annual increases [637]. - The company’s Employee Stock Purchase Plan reserves 6 million shares of Class A common stock for future issuance, with annual increases based on specific criteria [638].

A month ago, I wrote about Roblox (NYSE: RBLX ) in my article " Roblox: A High-Valuation Bet With Big Growth Potential. " Since then, the stock saw a 25% rally, only to erase 30% following a Q4 earnings report that disappointed some investors. AfterI am a 33-year-old investor and former hedge fund trader with a background in software engineering and finance. My career began in a small investment house where I trained as an analyst, gaining fundamental insights into the financial markets. I then transitioned ...

Core Insights - Roblox's share prices fell after the company issued disappointing guidance, despite a strong start to the year with a 13.5% increase year-to-date and a 48% rise over the past year [1] Financial Performance - Bookings for Q4 rose 21% year-over-year to $1.36 billion, but fell short of analyst expectations of $1.37 billion [4] - Daily active users grew 19% to 85.3 million, below the analyst consensus of 88.2 million, indicating potential revenue challenges [5] - Overall revenue increased 32% year-over-year to $988.2 million, with adjusted EBITDA improving from a loss of $44.8 million to a gain of $65.6 million [6] Stock-Based Compensation - The company recorded $258.2 million in stock-based compensation expenses for the quarter and $1 billion for the year, leading to a 5% increase in share count from 681.3 million to 714.7 million [7] Future Guidance - For Q1, Roblox forecasts bookings between $1.125 billion and $1.150 billion, with revenue expected to be between $990 million and $1.015 billion [9] - The company projects 2025 bookings of $5.2 billion to $5.3 billion, revenue between $4.245 billion and $4.345 billion, and adjusted EBITDA of $190 million to $265 million [8][10] Strategic Initiatives - Roblox aims to capture 10% of all gaming content spending on its platform, currently at 2.4% [10] - The company is integrating artificial intelligence to enhance user experience and platform safety [11] Market Position - Roblox is exploring additional monetization options through advertisements and shopping opportunities, with notable partnerships including Amazon and Shopify [12]

Core Insights - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions [3]. Group 1 - The analysis is intended for informational purposes and should not be considered professional investment advice [3]. - There is a clear statement that past performance does not guarantee future results, highlighting the inherent uncertainties in investment [4]. - The article expresses that the views or opinions may not reflect those of the platform as a whole, indicating a diversity of perspectives among analysts [4].