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.

Roblox valuation ipo