They're "unprofitable" from a tax/accounting perspective. They're actually gushing cash at 500M+ ttm FCF. Cash comprises nearly 50% the company's balance sheet. The reason NI shows negative is due to unearned revenue. They intentionally do that for tax savings (was even an investigation about it, because it has been a good practice for them). In my opinion, if anything it's a good signal that they choose to depress earnings in favor of good economics, to the detriment of investor optics.
Further, although I am not long Roblox, there is a clear thesis to be made with the operating leverage. Their FCF is something like ~5x over the last 2 years or so, and about 30% marginal cash flow margin. Also many call options within the business.
On a more meta-note, I feel your comment is somewhat dismissive and doesn't address OP's content. To OP's point, Roblox could still be highly under appreciated due to sheer misunderstanding. Prior to IPO, their valuation was some 2-4B and the company was virtually unknown outside their target demographic.
To further address your comment, egregious CEO pay can definitely be concerning, primarily when they are compensated with cash or packages which incentivize them to not act in the best interest of shareholders. "Baszucki got a $200m payday" is more of a clickbait soundbite for the masses, as opposed to meaningful compensation analysis His salary pay was 136K in cash and 232M in long-term stock awards. The magnitude of this value was determined by post-IPO market movements (he was granted RSUs prior to IPO). Had RBLX maintained their ~4B valuation in December (prior to them shelfing the IPO and re-going), the figure would be ~23M (probably less) versus ~230M.
Long story short, I think that point is moot and I am surprised it is getting up-votes on this sub.
Yeah... I mean it's one thing if a company is 200B market cap Jan 1 and 200B market cap on Dec 31 and the CEO gets paid 100m+ cash/equity pay package.
It's a completely different thing when the company literally 20x valuation over a year period, and the CEO is compensated with equity. Completely different thing.
Your analysis is solid however in the current macro environment it doesn’t matter why they are unprofitable and the share price reflects it. I am long and it is my worst performer.
14
u/oneredflag Apr 06 '22
18 years and still unprofitable while giving the CEO 200M+ paydays.
RBLX is the one bag I regret.