Trading Near Its 52-Week High, Can Roblox Stock Still Soar Higher?

Motley Fool12-14

Shares of Roblox have been rallying in recent months as investors have become more bullish on growth stocks. Roblox is a top gaming platform for young kids, and it recently announced enhanced ...

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The company's gaming platform is popular with young kids, and sales have been taking off in recent years. It has also been expanding its business so that its content is more appealing to a wider age group, as many young kids often move on from Roblox and onto consoles or more mature gaming options.The business's long-run growth opportunities are attractive, but the company remains unprofitable, which can be a roadblock preventing the stock from soaring much higher than where it is right now. Near its 52-week high, is there still room for Roblox stock to rally from here, or should investors consider cashing out and looki","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4535":"淡马锡持仓","BK4551":"寇图资本持仓","BK4565":"NFT概念","BK4585":"ETF&股票定投概念","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","BK4547":"WSB热门概念","BK4588":"碎股","BK4085":"互动家庭娱乐","LU1861558580.USD":"日兴方舟颠覆性创新基金B","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4554":"元宇宙及AR概念","RBLX":"Roblox Corporation"},"translate_title":"Roblox股价接近52周高点，还能飙升吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RBLX":1},"content_text":"Shares of Roblox have been rallying in recent months as investors have become more bullish on growth stocks.\n\n\n\n\n\n\n\nRoblox is a top gaming platform for young kids, and it recently announced enhanced safety measures.\n\n\n\n\n\n\n\nThe business is growing at a fast pace but the lack of profitability remains a big concern for investors.\n\nOne stock that has been surging in recent months is Roblox (RBLX -0.02%). The company's gaming platform is popular with young kids, and sales have been taking off in recent years. It has also been expanding its business so that its content is more appealing to a wider age group, as many young kids often move on from Roblox and onto consoles or more mature gaming options.The business's long-run growth opportunities are attractive, but the company remains unprofitable, which can be a roadblock preventing the stock from soaring much higher than where it is right now. Near its 52-week high, is there still room for Roblox stock to rally from here, or should investors consider cashing out and looking at other growth stocks to buy instead?Roblox addresses a big concern in online safetyAnytime an online service appeals to young kids, safety is going to be a key issue. If it's not safe, advertisers may not want their brands to be associated with the platform, which can have a significant impact on a company's growth potential.Earlier this year, Hindenburg Research, a prominent short-seller, issued a scathing report about Roblox, saying that it inflated its numbers and had lax safety measures, making it easy for online predators to target children on the gaming platform. Short-seller reports are often biased and can be misleading. However, Roblox does appear to be taking a stronger stance on online safety. Recently, it announced enhanced measures that will give parents more control over the type of content and games that their kids can access. Sending direct messages within a game will be disabled, by default, for children under the age of 13.But that's just one problem the company is facing. Another one is its lack of profitability.Growth remains impressive, but its losses are still significantIn Roblox's most recent quarterly results, which ended on Sept. 30, the company's bookings grew by 34% to $1.1 billion. Bookings are mainly made up of the sale of Roblox's virtual currency, Robux. This figure is higher than revenue as it includes deferred revenue but can be a better indicator of current period growth.The big issue for Roblox is that the business is simply nowhere near profitability. The company incurred a net loss of $239 million during the quarter, which was just a modest 14% improvement from the $277 million loss it posted a year earlier. While there has been progress, the company's losses are so deep that, with only a modest improvement over the past year, it's hard to see the business getting to breakeven anytime soon. And while the company is technically generating positive operating cash flow, it's leaning heavily on stock-based compensation, which totaled $265 million over the last three months. Without that, the company would have burned through cash, as its operating cash flow was just $247 million for the quarter.Is it too late to buy Roblox stock, or can its shares go even higher?Investors appear to have more of an appetite for growth stocks like Roblox these days, regardless of risk. As more interest rate cuts may take place next year, there's the potential for these types of investments to continue to rally.However, Roblox's significant losses shouldn't be ignored. The company has the opportunity to widen its revenue potential by reaching a broader audience and improving safety measures, but at this stage, it would have to drastically scale its operations to simply get to breakeven based on the current pace that it's on.If investors start to sour on growth stocks, perhaps if economic conditions worsen, Roblox and other unprofitable companies could see their valuations come down quickly. While the stock's rally in recent months is encouraging, that doesn't mean the risk relating to the business has evaporated.Roblox stock can be a good buy in the long run; I'm optimistic that the platform can give advertisers some unique ways to reach younger audiences. By offering a wider range of content, the company has plenty of growth opportunities to tap into down the road to expand its user base. However, investors will need to be patient with the business as it could take a while before it gets into the black, assuming it can at all. And until that happens, it could remain a bumpy ride for the stock.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2491255155"}