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2021-06-27
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5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021
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2021-06-24
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days","bigImgUrl":"https://static.tigerbbs.com/0063fb68ea29c9ae6858c58630e182d5","smallImgUrl":"https://static.tigerbbs.com/96c699a93be4214d4b49aea6a5a5d1a4","grayImgUrl":"https://static.tigerbbs.com/35b0e542a9ff77046ed69ef602bc105d","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.02.12","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1001},{"badgeId":"44212b71d0be4ec88898348dbe882e03-1","templateUuid":"44212b71d0be4ec88898348dbe882e03","name":"Boss Tiger","description":"The transaction amount of the securities account reaches $100,000","bigImgUrl":"https://static.tigerbbs.com/c8dfc27c1ee0e25db1c93e9d0b641101","smallImgUrl":"https://static.tigerbbs.com/f43908c142f8a33c78f5bdf0e2897488","grayImgUrl":"https://static.tigerbbs.com/82165ff19cb8a786e8919f92acee5213","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2022.03.23","exceedPercentage":"60.23%","individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1101},{"badgeId":"7a9f168ff73447fe856ed6c938b61789-1","templateUuid":"7a9f168ff73447fe856ed6c938b61789","name":"Knowledgeable Investor","description":"Traded more than 10 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30","bigImgUrl":"https://static.tigerbbs.com/ab0f87127c854ce3191a752d57b46edc","smallImgUrl":"https://static.tigerbbs.com/c9835ce48b8c8743566d344ac7a7ba8c","grayImgUrl":"https://static.tigerbbs.com/76754b53ce7a90019f132c1d2fbc698f","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","exceedPercentage":"60.04%","individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1100}],"userBadgeCount":5,"currentWearingBadge":null,"individualDisplayBadges":null,"crmLevel":4,"crmLevelSwitch":0,"location":null,"starInvestorFollowerNum":0,"starInvestorFlag":false,"starInvestorOrderShareNum":0,"subscribeStarInvestorNum":0,"ror":null,"winRationPercentage":null,"showRor":false,"investmentPhilosophy":null,"starInvestorSubscribeFlag":false},"baikeInfo":{},"tab":"post","tweets":[{"id":124700856,"gmtCreate":1624787495075,"gmtModify":1703845154296,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"⬆️","listText":"⬆️","text":"⬆️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/124700856","repostId":"2146090006","repostType":4,"repost":{"id":"2146090006","pubTimestamp":1624755315,"share":"https://ttm.financial/m/news/2146090006?lang=&edition=fundamental","pubTime":"2021-06-27 08:55","market":"us","language":"en","title":"5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021","url":"https://stock-news.laohu8.com/highlight/detail?id=2146090006","media":"Motley Fool","summary":"These growth and value stocks are begging to be bought by investors.","content":"<p>When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking the reins of <b>Berkshire Hathaway</b> (NYSE:BRK.A)(NYSE:BRK.B) in the mid-1960s, Buffett's company has averaged an annual return of 20%. This works out to an aggregate gain of greater than 2,800,000% for its Class A shares.</p>\n<p>Although Buffett isn't perfect, he and his investing team have a knack for identifying attractively valued businesses that have clear competitive advantages. As we prepare to move into the second half of 2021, the following five Buffett stocks stand out as those that should be bought hand over fist.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1077c8372814d2b8150e933b4c608005\" tg-width=\"700\" tg-height=\"466\"><span>Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.</span></p>\n<h2>Amazon</h2>\n<p>Even though Buffett's investing lieutenants, Todd Combs and Ted Weschler, are the architects behind Berkshire Hathaway's stake in <b>Amazon</b> (NASDAQ:AMZN), it's arguably the Buffett stock that should be bought most aggressively ahead of the second half of the year.</p>\n<p>As most folks probably know, Amazon is an e-commerce juggernaut. Based on an April report from eMarketer, the company effectively controls $0.40 of every $1 spent online in the United States. It's also pivoted its online retail popularity into signing up more than 200 million people to its Prime program worldwide. The fees Amazon collects from Prime help it to undercut its competition on price. And it certainly doesn't hurt that Prime members tend to spend many multiples more than non-Prime shoppers during the course of the year.</p>\n<p>But it's the company's cloud infrastructure service, Amazon Web Services (AWS), that has truly budded into a star. Since the operating margins associated with cloud infrastructure are considerably higher than what Amazon nets from retail and advertising, AWS' growth is leading to a surge in operating cash flow. If investors were to continue to pay the midpoint of Amazon's operating cash flow multiple over the past decade, it could hit $10,000 a share by 2025.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b18b49b2b35da2fc49e0a83b883d1c22\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Bristol Myers Squibb</h2>\n<p>Pharmaceutical stocks are money machines, and none looks to be more attractive on a valuation basis than <b>Bristol Myers Squibb</b> (NYSE:BMY).</p>\n<p>One reason to be excited about this drug developer is its organic growth potential. Eliquis, which was co-developed with <b>Pfizer</b>, has blossomed into the world's leading oral anticoagulant, with sales expected to surpass $10 billion in 2021. Meanwhile, dozens of additional clinical trials are underway for cancer immunotherapy Opdivo, which generated $7 billion in sales last year. This offers plenty of opportunity to expand Opdivo's label and pump up its pricing power.</p>\n<p>Another reason Bristol Myers Squibb is such an intriguing stock is its November 2019 acquisition of cancer and immunology company Celgene. Buying Celgene brought the blockbuster multiple-myeloma drug Revlimid into the fold. Revlimid has sustainably grown its annual sales by a double-digit percentage for more than a decade, with label expansion, longer duration of use, and pricing power all playing a role. This key treatment, which topped $12 billion in sales last year, is protected from a full onslaught of generic competition until early 2026. That means Bristol Myers will be rolling in the dough for another five years, at minimum.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1b152e369d7c967dcbc926192ee888c1\" tg-width=\"700\" tg-height=\"531\"><span>Image source: Getty Images.</span></p>\n<h2>Mastercard</h2>\n<p>Everyone seems to be looking for the smartest recovery play from the pandemic. Payment processor <b>Mastercard</b> (NYSE:MA) might well be the safest way to take advantage of a steady uptick in consumer and enterprise spending.</p>\n<p>Mastercard isn't a cheap stock by any means -- at 36 times Wall Street's forward-year earnings consensus -- but it benefits from a simple numbers game. While economic contractions and recessions are inevitable, these periods of turbulence tend to be short-lived. By comparison, economic expansions often last many years. Buying into Mastercard allows investors to take full advantage of these long periods of economic expansion and robust spending. Plus, it doesn't hurt that Mastercard has the second-highest share of credit-card network purchase volume in the U.S., the leading market for consumption.</p>\n<p>Investors can also sleep easy with the understanding that Mastercard strictly sticks to payment facilitation. Even though some of its peers also lend, and are therefore able to generate interest income and fees during bull markets, Mastercard has avoided becoming a lender. It's something you'll truly appreciate when a recession strikes. Whereas most financial stocks will be forced to set aside capital to cover credit or loan delinquencies, Mastercard won't have to. This is a big reason it bounces back from recessions quicker than most financial stocks.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e4e1a1fe028efa4c966b66ef2cd466f5\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Teva Pharmaceutical Industries</h2>\n<p>If you have an appetite for turnaround plays, brand-name and generic-drug developer <b>Teva Pharmaceutical Industries</b> (NYSE:TEVA) is the stock to buy hand over fist for the second half of 2021. Like Amazon, it's a stock that was added to Berkshire Hathaway's portfolio by either Combs or Weschler and not Buffett.</p>\n<p>While there's no denying that Teva has its fair share of hurdles to overcome, the company's turnaround-focused CEO, Kare Schultz, has been a blessing. Since taking the helm less than four years ago, Schultz has helped shave off more than $10 billion in net debt, and he's overseen the reduction of roughly $3 billion in annual operating expenses. There's more work to do to improve Teva's balance sheet, but the company is very clearly on much firmer ground than it was back in 2016-2017.</p>\n<p>Schultz also has the potential to play peacemaker for a number of outstanding lawsuits targeting Teva's role in the opioid crisis. If this litigation can be resolved with minimal cash outlay, Teva's valuation could soar. At just 4 times the company's projected earnings in 2021, Teva is about as cheap as a healthcare stock can get.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/44a30c4dfd6886a29e22d3c6558c3e56\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Bank of America</h2>\n<p>Lastly, bank stock <b>Bank of America</b> (NYSE:BAC) has the look of a company that can be confidently bought hand over fist for the second half of 2021.</p>\n<p>For much of the past decade, the Federal Reserve has kept interest rates at or near historic lows. That's meant less in the way of interest income for banks. But the latest update from the nation's central bank suggests that interest rates could begin creeping up in 2023, a year earlier than previously forecast. Bank of America is the most interest-sensitive money-center bank. According to its first-quarter investor presentation, BofA would generate $8.3 billion in net interest income on a 100-basis-point shift in the interest rate yield curve. Translation: Bank of America's profits should rocket higher beginning in 2023-2024.</p>\n<p>At the same time, BofA has done an outstanding job of controlling its costs and improving its operating efficiency. Investments in digitization have resulted in higher mobile app and digital banking use, which is allowing the company to consolidate some of its branches. Even with its shares at a 13-year high, Bank of America has plenty left in the tank.</p>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-27 08:55 GMT+8 <a href=https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BMY":"施贵宝","BAC":"美国银行","MA":"万事达","BRK.A":"伯克希尔","TEVA":"梯瓦制药","BRK.B":"伯克希尔B","AMZN":"亚马逊"},"source_url":"https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2146090006","content_text":"When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking the reins of Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) in the mid-1960s, Buffett's company has averaged an annual return of 20%. This works out to an aggregate gain of greater than 2,800,000% for its Class A shares.\nAlthough Buffett isn't perfect, he and his investing team have a knack for identifying attractively valued businesses that have clear competitive advantages. As we prepare to move into the second half of 2021, the following five Buffett stocks stand out as those that should be bought hand over fist.\nBerkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.\nAmazon\nEven though Buffett's investing lieutenants, Todd Combs and Ted Weschler, are the architects behind Berkshire Hathaway's stake in Amazon (NASDAQ:AMZN), it's arguably the Buffett stock that should be bought most aggressively ahead of the second half of the year.\nAs most folks probably know, Amazon is an e-commerce juggernaut. Based on an April report from eMarketer, the company effectively controls $0.40 of every $1 spent online in the United States. It's also pivoted its online retail popularity into signing up more than 200 million people to its Prime program worldwide. The fees Amazon collects from Prime help it to undercut its competition on price. And it certainly doesn't hurt that Prime members tend to spend many multiples more than non-Prime shoppers during the course of the year.\nBut it's the company's cloud infrastructure service, Amazon Web Services (AWS), that has truly budded into a star. Since the operating margins associated with cloud infrastructure are considerably higher than what Amazon nets from retail and advertising, AWS' growth is leading to a surge in operating cash flow. If investors were to continue to pay the midpoint of Amazon's operating cash flow multiple over the past decade, it could hit $10,000 a share by 2025.\nImage source: Getty Images.\nBristol Myers Squibb\nPharmaceutical stocks are money machines, and none looks to be more attractive on a valuation basis than Bristol Myers Squibb (NYSE:BMY).\nOne reason to be excited about this drug developer is its organic growth potential. Eliquis, which was co-developed with Pfizer, has blossomed into the world's leading oral anticoagulant, with sales expected to surpass $10 billion in 2021. Meanwhile, dozens of additional clinical trials are underway for cancer immunotherapy Opdivo, which generated $7 billion in sales last year. This offers plenty of opportunity to expand Opdivo's label and pump up its pricing power.\nAnother reason Bristol Myers Squibb is such an intriguing stock is its November 2019 acquisition of cancer and immunology company Celgene. Buying Celgene brought the blockbuster multiple-myeloma drug Revlimid into the fold. Revlimid has sustainably grown its annual sales by a double-digit percentage for more than a decade, with label expansion, longer duration of use, and pricing power all playing a role. This key treatment, which topped $12 billion in sales last year, is protected from a full onslaught of generic competition until early 2026. That means Bristol Myers will be rolling in the dough for another five years, at minimum.\nImage source: Getty Images.\nMastercard\nEveryone seems to be looking for the smartest recovery play from the pandemic. Payment processor Mastercard (NYSE:MA) might well be the safest way to take advantage of a steady uptick in consumer and enterprise spending.\nMastercard isn't a cheap stock by any means -- at 36 times Wall Street's forward-year earnings consensus -- but it benefits from a simple numbers game. While economic contractions and recessions are inevitable, these periods of turbulence tend to be short-lived. By comparison, economic expansions often last many years. Buying into Mastercard allows investors to take full advantage of these long periods of economic expansion and robust spending. Plus, it doesn't hurt that Mastercard has the second-highest share of credit-card network purchase volume in the U.S., the leading market for consumption.\nInvestors can also sleep easy with the understanding that Mastercard strictly sticks to payment facilitation. Even though some of its peers also lend, and are therefore able to generate interest income and fees during bull markets, Mastercard has avoided becoming a lender. It's something you'll truly appreciate when a recession strikes. Whereas most financial stocks will be forced to set aside capital to cover credit or loan delinquencies, Mastercard won't have to. This is a big reason it bounces back from recessions quicker than most financial stocks.\nImage source: Getty Images.\nTeva Pharmaceutical Industries\nIf you have an appetite for turnaround plays, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE:TEVA) is the stock to buy hand over fist for the second half of 2021. Like Amazon, it's a stock that was added to Berkshire Hathaway's portfolio by either Combs or Weschler and not Buffett.\nWhile there's no denying that Teva has its fair share of hurdles to overcome, the company's turnaround-focused CEO, Kare Schultz, has been a blessing. Since taking the helm less than four years ago, Schultz has helped shave off more than $10 billion in net debt, and he's overseen the reduction of roughly $3 billion in annual operating expenses. There's more work to do to improve Teva's balance sheet, but the company is very clearly on much firmer ground than it was back in 2016-2017.\nSchultz also has the potential to play peacemaker for a number of outstanding lawsuits targeting Teva's role in the opioid crisis. If this litigation can be resolved with minimal cash outlay, Teva's valuation could soar. At just 4 times the company's projected earnings in 2021, Teva is about as cheap as a healthcare stock can get.\nImage source: Getty Images.\nBank of America\nLastly, bank stock Bank of America (NYSE:BAC) has the look of a company that can be confidently bought hand over fist for the second half of 2021.\nFor much of the past decade, the Federal Reserve has kept interest rates at or near historic lows. That's meant less in the way of interest income for banks. But the latest update from the nation's central bank suggests that interest rates could begin creeping up in 2023, a year earlier than previously forecast. Bank of America is the most interest-sensitive money-center bank. According to its first-quarter investor presentation, BofA would generate $8.3 billion in net interest income on a 100-basis-point shift in the interest rate yield curve. Translation: Bank of America's profits should rocket higher beginning in 2023-2024.\nAt the same time, BofA has done an outstanding job of controlling its costs and improving its operating efficiency. Investments in digitization have resulted in higher mobile app and digital banking use, which is allowing the company to consolidate some of its branches. Even with its shares at a 13-year high, Bank of America has plenty left in the tank.","news_type":1},"isVote":1,"tweetType":1,"viewCount":192,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":128137736,"gmtCreate":1624505391625,"gmtModify":1703838666680,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/128137736","repostId":"2145156570","repostType":4,"repost":{"id":"2145156570","weMediaInfo":{"introduction":"Reuters.com brings you the latest news from around the world, covering breaking news in markets, business, politics, entertainment and technology","home_visible":1,"media_name":"Reuters","id":"1036604489","head_image":"https://static.tigerbbs.com/443ce19704621c837795676028cec868"},"pubTimestamp":1624489510,"share":"https://ttm.financial/m/news/2145156570?lang=&edition=fundamental","pubTime":"2021-06-24 07:05","market":"us","language":"en","title":"Tesla lifts Nasdaq to record-high close, S&P 500 dips","url":"https://stock-news.laohu8.com/highlight/detail?id=2145156570","media":"Reuters","summary":"June 23 - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.Gains in Nvidia Corp and $Facebook$ Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.Data firm IHS $Markit$ said its flash U.S. manufacturi","content":"<p>June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.</p>\n<p>Gains in Nvidia Corp and <a href=\"https://laohu8.com/S/FB\">Facebook</a> Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.</p>\n<p>Data firm IHS <a href=\"https://laohu8.com/S/MRKT\">Markit</a> said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.</p>\n<p>The \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.</p>\n<p>On Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.</p>\n<p>Powell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.</p>\n<p>\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.</p>\n<p>Eight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .</p>\n<p>Tesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.</p>\n<p>Extending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.</p>\n<p>The Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.</p>\n<p>The Nasdaq Composite climbed 0.13% to 14,271.73.</p>\n<p>The S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.</p>\n<p>Nikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.</p>\n<p>Among so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while <a href=\"https://laohu8.com/S/TRCH\">Torchlight Energy Resources Inc</a> slumped 30%, tumbling for a second day after announcing an upsized stock offering.</p>\n<p>Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.</p>\n<p>The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.</p>\n<p>Volume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla lifts Nasdaq to record-high close, S&P 500 dips</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla lifts Nasdaq to record-high close, S&P 500 dips\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1036604489\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/443ce19704621c837795676028cec868);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Reuters </p>\n<p class=\"h-time\">2021-06-24 07:05</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<p>June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.</p>\n<p>Gains in Nvidia Corp and <a href=\"https://laohu8.com/S/FB\">Facebook</a> Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.</p>\n<p>Data firm IHS <a href=\"https://laohu8.com/S/MRKT\">Markit</a> said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.</p>\n<p>The \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.</p>\n<p>On Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.</p>\n<p>Powell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.</p>\n<p>\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.</p>\n<p>Eight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .</p>\n<p>Tesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.</p>\n<p>Extending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.</p>\n<p>The Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.</p>\n<p>The Nasdaq Composite climbed 0.13% to 14,271.73.</p>\n<p>The S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.</p>\n<p>Nikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.</p>\n<p>Among so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while <a href=\"https://laohu8.com/S/TRCH\">Torchlight Energy Resources Inc</a> slumped 30%, tumbling for a second day after announcing an upsized stock offering.</p>\n<p>Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.</p>\n<p>The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.</p>\n<p>Volume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.</p>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NDAQ":"纳斯达克OMX交易所","UPRO":"三倍做多标普500ETF",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index","TSLA":"特斯拉","INFO":"Harbor PanAgora Dynamic Large Cap Core ETF","NKLA":"Nikola Corporation","IVV":"标普500指数ETF",".DJI":"道琼斯","NVDA":"英伟达"},"is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2145156570","content_text":"June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.\nGains in Nvidia Corp and Facebook Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.\nData firm IHS Markit said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.\nThe \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.\nOn Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.\nPowell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.\n\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.\nEight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .\nTesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.\nExtending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.\nThe Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.\nThe Nasdaq Composite climbed 0.13% to 14,271.73.\nThe S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.\nNikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.\nAmong so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while Torchlight Energy Resources Inc slumped 30%, tumbling for a second day after announcing an upsized stock offering.\nAdvancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.\nThe S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.\nVolume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.","news_type":1},"isVote":1,"tweetType":1,"viewCount":151,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":136859615,"gmtCreate":1622008146637,"gmtModify":1704365978703,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"Monitoring ","listText":"Monitoring ","text":"Monitoring","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/136859615","repostId":"1170860218","repostType":2,"repost":{"id":"1170860218","pubTimestamp":1621583624,"share":"https://ttm.financial/m/news/1170860218?lang=&edition=fundamental","pubTime":"2021-05-21 15:53","market":"us","language":"en","title":"Roblox: Building The Metaverse, But For Whom?","url":"https://stock-news.laohu8.com/highlight/detail?id=1170860218","media":"seekingalpha","summary":"Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, ","content":"<p><b>Summary</b></p>\n<ul>\n <li>Roblox is effectively the YouTube of game development and game consumption.</li>\n <li>Game creators, who are often just average people with little in the way of coding skills, can build games on the platform and sell those games to users of the platform.</li>\n <li>The platform has something of its own economy, in which Robux are used as currency to purchase games and for micro-purchases within those games.</li>\n <li>Historically, a very young demographic has found the platform appealing, leading to questions about its ability to evolve upstream and create a true metaverse.</li>\n <li>Roblox has rapidly grown, and in this note, we provide a very deep and comprehensive exploration of the platform. Ultimately, we rate the company a modest buy.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1a50e6bae4d28d9fb1a3a3b477be5436\" tg-width=\"1536\" tg-height=\"1024\" referrerpolicy=\"no-referrer\"><span>Photo by Ian Tuttle/Getty Images Entertainment via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Roblox (RBLX) is a social gaming marketplace platform that connects gamers and developers. Through its global community of 8 million-plus developers, Roblox provides immersive gaming experiences that are shared by millions of gamers. In 2020, mobile gaming platforms like Roblox saw explosive growth in revenue as users flocked to these platforms during coronavirus-enforced lockdowns. A year of bookings stagnation awaits Roblox as demand for mobile gaming normalizes. However, AR/VR is just getting started, and the company has a long growth runway due to the large size of its TAM. Roblox is a free cash flow generation machine, as we will learn in this article, but the current valuation is a little too steep considering the weak guidance for 2021.</p>\n<p><i><b>Here's our investment thesis for Roblox:</b></i></p>\n<ul>\n <li><p>Roblox is a platform that enables users to enjoy millions of immersive 3D experiences (primarily games). Like YouTube, Roblox's content is user generated. Today, Roblox has more than 32M daily active users and 8M+ developers on its platform.</p></li>\n <li><p>Right from its inception in 2006, Roblox has been led by its visionary founder - David Baszucki. His vision for social gaming and shared virtual experiences is the driving force behind the company's admirable success.</p></li>\n <li><p>Roblox is a highly profitable business that's growing like a weed at scale. In 2020, Roblox's business was boosted by the coronavirus pandemic as mobile gaming saw exponential growth. However, the rise in mobile gaming is a secular growth trend. Furthermore, AR/VR technology is set to go mainstream over the coming years, which will likely help Roblox drive future revenue growth.</p></li>\n <li><p>The Roblox platform is powered by advanced proprietary technology. Developers create content using Roblox Studio, and consumers (gamers) access this content through Roblox Client (interface to 3D digital worlds). Money is made through the sale of Roblox's virtual currency - Robux, which players use to make in-game purchases.</p></li>\n <li><p>For 2021, Roblox is expecting revenue to grow from $923M to ~$1450M. However, the bookings are projected to rise by just 10% year-over-year (near-stagnation), and free cash flow is set to decline too. The company is well capitalized, and it's already free cash flow generative, so I do not foresee any significant dilutionary events for Roblox.</p></li>\n <li><p>During the recent correction in high-growth tech stocks, Roblox has surprisingly held on to its IPO bounce. There are many great deals out there in the market right now. However, Roblox is not one of them. The stock is trading at a premium of 20% to its fair value. Since the expected returns for Roblox is less than BTM's investment hurdle rate, I rate it hold at $70.</p></li>\n <li><p>Roblox is a great company, which I would buy on dips. At BTM, we will initiate a starter position below $60 (if we get such an opportunity). For now, Roblox is being added to our primary portfolio as a hold.</p></li>\n</ul>\n<p>In today's article, we will study Roblox's business in detail, analyze its financials, and determine its fair value.</p>\n<p><b>Introducing Roblox</b></p>\n<p>Roblox is a social gaming platform where an average of 37.1 million people from around the world come to play games with friends on a daily basis. While on Roblox, users can play, learn, explore, and communicate in user-generated virtual realities (games with 3D digital worlds) created by Roblox's community of 8M+ game developers. Roblox terms this emerging category as \"human co-experience\", which it considers to be the new form of social interaction (and this idea was envisioned by Roblox way back in 2004).</p>\n<p>The Roblox platform is powered by user-generated content (like YouTube (GOOG)(NASDAQ:GOOGL)) and draws inspiration from gaming, entertainment, social media, and even toys. This emerging category is also referred to as the metaverse - a term often used to describe the concept of persistent, shared, 3D virtual spaces in a virtual universe. I discussed this concept in a note entitled, \"Introducing President Mark Zuckerberg.\"</p>\n<p>The idea of a metaverse has been written about by futurists and science fiction authors for over 30 years. With the advent of increasingly powerful consumer computing devices, cloud computing, and high bandwidth internet connections, the concept of the metaverse is materializing.</p>\n<p>The Roblox human co-experience platform serves as the underlying technology and infrastructure that supports shared experiences for millions of users, and it consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud.</p>\n<ul>\n <li><p><i><b>Roblox Client</b></i>- The application that allows users to explore 3D digital worlds.</p></li>\n <li><p><i>Roblox Studio</i>- The toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client.</p></li>\n <li><p><i>Roblox Cloud</i>- The services and infrastructure that power the human co-experience platform.</p></li>\n</ul>\n<p>Roblox's mission is to build a human co-experience platform that enables shared experiences among billions of users. Since its inception, Roblox has invested heavily in building the Roblox platform, and ~80% of Roblox's employees are dedicated to maintaining, improving, and expanding the platform. The company is constantly improving the ways in which the Roblox platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers to how they are enjoyed and safely accessed by users across the globe.</p>\n<p>According to Roblox's S-1 filing, the Roblox platform is differentiated through a number of key characteristics, which are mentioned below (the following are quoted from the company's S-1 linked just a moment ago):</p>\n<blockquote>\n <i>Identity:All users have unique identities in the form of avatars that allow them to express themselves as whoever or whatever they want to be. These avatars are portable across experiences.</i>\n</blockquote>\n<blockquote>\n <i>Friends: Users interact with friends, some of whom they know in the real world, and others who they meet on Roblox.</i>\n</blockquote>\n<blockquote>\n <i>Immersive</i>\n <i><b>:</b></i>\n <i>The experiences on Roblox are 3D and immersive. As we continue to improve the Roblox Platform, these experiences will become increasingly engaging and indistinguishable from the real world.</i>\n</blockquote>\n<blockquote>\n <i>Anywhere: Users, developers, and creators on Roblox are from all over the world, including North America, Europe, South America, Asia, Australia, and Africa. In 2019, we entered into a joint venture agreement with Songhua River Investment Limited, or Songhua, an affiliate of Tencent, to operate a Chinese version of the Roblox Platform that will be operated and published in China by Tencent under the name “Luobulesi.” Further, as of December 31, 2020, the Roblox Client operates on iOS, Android, PC, Mac, and Xbox, and supports VR experiences on PC using Oculus Rift and HTC Vive headsets.</i>\n</blockquote>\n<blockquote>\n <i>Low Friction: It is simple to set up an account on Roblox and free for users to enjoy experiences on the platform. Users can quickly traverse between and within experiences either on their own or with their friends. It is also easy for developers to build experiences and then publish them to the Roblox Cloud so that they are then accessible to users on the Roblox Client across all platforms. On behalf of the developers and creators, Roblox also provides critical services such as user acquisition, billing, collections, content moderation, translation, safety, regulatory compliance, and customer support. This makes it easier and simpler for even individual developers and creators and small studios to be successful developers and creators.</i>\n</blockquote>\n<blockquote>\n <i>Variety of Content: Roblox is a vast and expanding universe of developer and creator-built content. As of Dec. 31, 2020, there were over 20 million experiences on Roblox, and in the year ended Dec. 31, 2020, over 13 million of these were experienced by our community. These ranged from experiences that simulate building and operating a theme park to adopting a pet, scuba diving, creating and playing your own superhero, and more. There also are millions of creator-built virtual items, such as hats, shirts, and pants, with which users can personalize their avatars and 3D virtual items, assets, and sounds that creators can incorporate into experiences. Historically, Roblox has also created virtual items with which users can personalize their avatars. Our focus today and going forward, however, is on user-generated content.</i>\n</blockquote>\n<blockquote>\n <i>Economy: Roblox has a vibrant economy built on a currency called Robux. Users who choose to purchase Robux can spend the currency on experiences and on items for their avatar. Developers and creators earn Robux by building engaging experiences and compelling items that users want to purchase. Roblox enables developers and creators to convert Robux back into real-world currency.</i>\n</blockquote>\n<blockquote>\n <i>Safety: Multiple systems are integrated into the Roblox Platform to promote civility and ensure the safety of our users. These systems are designed to enforce real-world laws and are designed to extend beyond minimum regulatory requirements.</i>\n</blockquote>\n<p>The revenue growth at Roblox has been driven primarily by significant investments in technology and two mutually reinforcing network effects: content and social.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2d5e601c76dc33b042de56f0d000fecc\" tg-width=\"640\" tg-height=\"194\"><span>Source:Roblox S-1</span></p>\n<p>Roblox's platform is powered by user-generated content that's built by an engaged community of developers and creators. As Roblox's developers and creators build increasingly high-quality content, more users are attracted to their platform. The more users on the platform, the higher the engagement and the more attractive Roblox becomes to developers and creators. With more users, more Robux (Roblox's virtual currency) is spent on the platform, which in turn incentivizes developers to build more engaging content for users and attracts new developers and content creators to the Roblox developer community.</p>\n<p>The social nature of Roblox's platform makes it special. Roblox's users typically play with friends, and this inspires them to invite more friends to the platform, who, in turn, invite their friends, driving organic growth. A higher number of friends on the platform leads to increased long-term user engagement. Therefore, more and more users join Roblox's platform through word-of-mouth marketing from their existing friends using the platform.</p>\n<p>Now that we have an understanding of Roblox's platform, let's see how Roblox's economy functions, in other words, how Roblox makes money:</p>\n<p>Roblox is powered by exclusive user-generated games that include personalized avatars. Upon joining Roblox, gamers can personalize their avatars by choosing body types, clothes, and other accessories. To do so, the gamers purchase a virtual currency (Robux) from within Roblox's platform. Game developers and content creators earn Robux through microtransactions in their games, such as selling in-game virtual items and engagement-based rewards. Through Roblox's Developer Exchange Program, developers can exchange Robux for real-world currency. This is how money flows from gamers to developers on Roblox's platform.</p>\n<p>The income generated through Roblox empowers game developers (individuals and game studios) to invest in higher-quality content, which attracts more gamers to Roblox. Having enjoyed Roblox, users tend to invite more friends to play on the platform, and this helps game developers attract larger audiences. According to Roblox, many users eventually become developers on the platform, and nearly all Roblox developers started as users. Therefore, Roblox has a robust community and a vibrant economy.</p>\n<p>Roblox supports its developer community by providing tools to create, publish, operate, and monetize content (games and experiences). In 2020, more than 1.25M developers earned Robux, and ~4,300 developers qualified for Roblox's Developer Exchange Program, making them eligible to exchange their earned Robux for real-world currency. To qualify for the Developer Exchange Program, the developers need to meet certain conditions, such as:</p>\n<ul>\n <li><p>Earn at least 100,000 Robux,</p></li>\n <li><p>Verified developer account, and</p></li>\n <li><p>Account must be in good standing.</p></li>\n</ul>\n<p>In 2020, more than 3300 developers exchanged Robux for real-world currency. According to Roblox's disclosures, 1,250-plus developers earned more than $10K in 2020, whereas 300-plus developers made more than $100K in the same period.</p>\n<p>Generally, Roblox users can create an avatar and explore experiences for free after joining the platform. However, the business model for any given game is decided by its developer. Within these free games, users can spend Robux to purchase in-game enhancements and items such as clothing, gear and emotes, from Roblox's Avatar Marketplace. As you may already know, Roblox retains a portion of every Robux transaction and distributes the rest to developers.</p>\n<p>Important Note: Robux can only be purchased from Roblox at a price set by Roblox and can only be spent within its platform.</p>\n<p><i><b>Key Disclosure from Roblox in relation to Robux:</b></i></p>\n<p>Other than daily and monthly limitations to prevent fraud, there's no cap on the number of Robux that any user or users in the aggregate can purchase. Robux has no monetary or intrinsic value outside of our platform and can only be converted to US dollars through our Developer Exchange Program. We're aware that some users seek to use unauthorized third-party websites to exchange Robux for real-world currency, which is not permitted under our terms of use. We regularly monitor and screen usage of our platform with the aim of identifying and preventing these activities, as well as regularly send cease-and-desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ede644886149994d8bf4d76e109903da\" tg-width=\"640\" tg-height=\"183\"><span>Source:Roblox S-1</span></p>\n<p>Gamers primarily purchase Robux in two ways: 1. One-time purchases or 2. Roblox Premium subscription service. Roblox accepts payments through (Apple’s and Google’s) app stores, credit cards, and debit cards. In 2020, the average price for a Robux was $0.01. Roblox Premium is billed monthly, and this subscription service includes discounts on Robux purchases, exclusive access to certain in-experience benefits, some exclusive and discounted marketplace items, and the ability to buy, sell and trade certain Avatar items. In 2020, Roblox’s bookings (sale of Robux) came in at $1.8B, which means that Roblox’s ~140M users spent an average of $12.85 on the platform (the average revenue per daily active users is much higher at about $60).</p>\n<p>For developers, Robux is considered \"earned\" if and when a developer receives them as payments for a bonafide third-party transaction for virtual goods through the Roblox Platform. Currently, developers can earn Robux via the following mechanisms:</p>\n<ul>\n <li><p>Sale of access to experiences (games) and in-game enhancements,</p></li>\n <li><p>Engagement-based payouts for the amount of time that Roblox Premium subscribers spend in their experiences,</p></li>\n <li><p>Sale of content and tools within the developer community, and</p></li>\n <li><p>Sale of virtual items to gamers through the Avatar Marketplace.</p></li>\n</ul>\n<p>As Roblox users’ purchase and spend Robux on the platform, developers receive 70% of the Robux spent within their games and 70% of the Robux spent on Roblox's Studio Marketplace items. Content creators receive only 30% of the Robux spent for their Avatar Marketplace items. The earned Robux are deposited into the virtual accounts of the developers and creators, who (if qualified) can convert Robux into U.S. dollars at an exchange rate which is (again) set by Roblox (in its sole discretion) at 1 Robux to $0.0035 (conversion price as of Dec. 31, 2020).</p>\n<p>As you may remember, the average purchase price of a Robux was $0.01 in 2020, and now we know that developers can exchange a Robux for $0.0035 (35% of Robux’s purchase price). Therefore, the unit economics are undoubtedly tilted in favor of Roblox, and the virtual economy built within Roblox’s ecosystem gives the company massive controlling power.</p>\n<p>In 2020, Roblox’s qualified developers (Developer Exchange Program) earned $328.7M, up from $112M in 2019. The growth in developer earnings resulted from a growth in qualified developers, a rise in DAUs, and higher engagement with consumers. As an aside, Roblox’s developers do not always cash out their Robux into real-world currency as they can reinvest their Robux into developer tools available in the Studio Marketplace, promote their games through Roblox’s internal ad network, or spend the Robux as any other Roblox gamer would (on experiences and in-game purchases).</p>\n<p>The Roblox platform combines significant bookings (sale of Robux) (and, by extension, revenue) with strong unit economics to generate massive amounts of free cash flow.</p>\n<p><b>Roblox Had A Great 2020, But What Next?</b></p>\n<p>In 2020, the coronavirus pandemic boosted the mobile gaming industry as people (kids, to be precise) stayed home during lockdowns. Roblox's social gaming platform saw an influx of new users, and bookings shot up to over $2B. As you can see, Roblox's revenues grew by 81% y/y to $923M last year.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/fc0cfffc9c8d80819d91a250992a9898\" tg-width=\"578\" tg-height=\"211\"><span>Source:Roblox S-1</span></p>\n<p>The rapid revenue growth is attributable to an increase in numbers of active users and higher user engagement (and spending). Roblox's DAUs went up from 19M to 37M within a year, while average bookings per DAU shot up to $17.30 from $12.37. For Q4, total hours engaged came in at 8.4B hours, a figure that represented substantial growth on a y/y basis; however, it also represented a q/q decline.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/177a566cf075069e89d034c2be758743\" tg-width=\"640\" tg-height=\"97\"><span>Source:Roblox S-1</span></p>\n<p>Although Roblox's operations continue to lose money, the company is actually generating massive amounts of free cash flow. The bookings made on Roblox's platform convert to revenue over time as in-game virtual goods are consumed or amortized (in accordance with the average life of the consumer).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5f39e4d22bafd479e902ab3f1665fdc8\" tg-width=\"638\" tg-height=\"253\"><span>Source:Roblox S-1</span></p>\n<p>On the back of ultra-strong numbers in 2020, Roblox's public listing seems to be timed to perfection. From a reference price of $45, the stock rallied higher on the direct listing day and has continued to trade up at ~$65-80 range. Here's what Roblox's CEO had to say on the listing:</p>\n<p>Source:Roblox CEO David Baszucki on the company's Wall Street debut</p>\n<p>Roblox's growth numbers for 2020 were mind boggling. However, the expectations for 2021 are lukewarm (and rightly so). With the pandemic fading away, people are returning towards normality, and a reduction in hours spent on gaming is a certainty.</p>\n<p>For 2021, Roblox is expecting DAU growth of just 6%, with flat numbers for hours engaged. Although the company expects revenue to grow by 60% y/y, bookings (closer estimation of Roblox's actual growth) are expected to grow at just 10% y/y.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/45e3095d76d9eae90689957db0de751e\" tg-width=\"640\" tg-height=\"477\"><span>Source:Roblox S-1</span></p>\n<p>As bookings growth moderates and the company spends more on R&D to drive future growth, the company's free cash flow is set to decline in 2021. Therefore, I would not expect fireworks to continue for Roblox's stock over the coming year as it faces tough comps.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/00d25029806cc3b0dad1e9efd61ffa8c\" tg-width=\"362\" tg-height=\"279\"><span>Source:Roblox S-1</span></p>\n<p>With that being said, Roblox's growth story is far from over. In fact, I can envision a very long growth runway for Roblox (similar to Unity). The growth of interactive, real-time 3D content across numerous industries (like Gaming, Architecture, 3D printing/Intelligent Manufacturing, AR/VR, and many more) will drive the demand for Roblox's platform higher over the coming years.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eb11e9e1f7a643251919f7571ebe5b76\" tg-width=\"800\" tg-height=\"389\"><span>Source:Newzoo</span></p>\n<p>In 2020, mobile gaming was the fastest-growing industry among all forms of gaming, and it's now believed to be worth $77.2B. And by 2025, it's expected to be worth$150B per annum. Naturally, Roblox will benefit from the rapid growth in mobile gaming. Therefore, Roblox is supported by a very powerful secular growth trend, i.e., the rise of mobile gaming.</p>\n<p>However, the real upside for Roblox's platform will come from the mainstream adoption of AR/VR technology. These markets are set to see explosive growth over upcoming years:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/33223820bc4aa2314eaa98345d74820c\" tg-width=\"900\" tg-height=\"466\"><span>Source:DevTeam</span></p>\n<p>Economically viable virtual realities are already all around us in that games are massively profitable and are pseudo-virtual realities. I believe that this market will actually accelerate as wide-scale adopted virtual realities begin popping up over the next decade or two, many of which will likely be built atop platforms such as Roblox and Unity.</p>\n<p>Although I like Unity, I believe that Roblox's platform has greater potential due to the democratization of content generation. Roblox is transforming the world of interactive gaming by changing how people express themselves, play, socialize, learn, and transact together. According to the management, Roblox is currently focused on the following growth initiatives:</p>\n<ul>\n <li><p>Platform Extension: Roblox is continually investing to extend its platform. These investments include high fidelity avatars, 3D spatial audio technology, and additional social features. In the future, Roblox can expand into other areas like entertainment, e-learning (education), and enterprise work communications. For example, developers will be able to create and host virtual meetings, classrooms, concerts, and conferences on the Roblox platform.</p></li>\n <li><p>Age Demographics Expansion: Today, a large chunk of Roblox’s users are kids below the age of 13. However, platform extension will enable developers to build higher quality experiences (games and other content) that are curated to meet the needs of an older age demographic. If Roblox can successfully increase its penetration among other older age categories, then it can easily grow at swashbuckling rates for years to come.</p></li>\n <li><p>International Reach: Roblox already is a global platform. However, there's still significant potential for the company to grow in international markets. Today, almost all of Roblox’s revenue comes from the United States, Canada, and United Kingdom. Hence, there are big markets for Roblox to expand its presence. Roblox is expecting the same organic, word-of-mouth user and developer growth in international markets that the platform has experienced in its primary markets. Additionally, Roblox is making massive investments in technology to enhance growth across the globe. For example, features such as built-in regional compliance and automated language translation can enable Roblox to scale operations in global markets, allowing developers to publish games (or content) in multiple languages and allowing users (speaking different languages) to communicate effectively. Roblox’s greatest international opportunity today is China, and the company is addressing this opportunity through a joint venture with Songhua (an affiliate of Tencent, which is one of the leading internet companies in China).</p></li>\n <li><p>Monetization: Roblox believes that its platform has massive monetization potential. To improve monetization, Roblox is actively working with the developer community. Furthermore, Roblox is taking up new strategic initiatives such as the Roblox Premium subscription service to enhance retention of paying users and conversion of free users to paying users. Finally, Roblox is working with leading brands (like Warner Bros, NFL, Netflix, Marvel, WWE, and FC Barcelona) to build unique marketing opportunities on the Roblox Platform through branded content.</p></li>\n</ul>\n<p>Hence, Roblox will likely resume robust bookings growth after the projected slowdown in 2021. As you may know, Roblox competes for both users, developers, and creators. Roblox competes to attract and retain its users' attention on the basis of content and user experiences. Therefore, Roblox competes for users and their engagement hours with global technology leaders such as Amazon, Apple, Google, Microsoft, Facebook, and Tencent, global entertainment companies such as Disney, Comcast, and ViacomCBS, global gaming companies such as Electronic Arts, Activision Blizzard, Take-Two, Unity, Valve, and Zynga, online content platforms including Spotify, Netflix, and YouTube, as well as social platforms such as Facebook, Snap, and Pinterest.</p>\n<p>For now, Roblox is out-competing its rivals due to many factors such as personalization of user experience, content variety, and social features. However, Roblox is heavily reliant on developers for the content that leads to the creation and maintenance of user engagement on its platform. Hence, Roblox has to compete with other platforms like Unity to attract and retain developers. Therefore, Roblox has to provide advanced tools needed to build, publish, operate, and monetize content (more efficiently and more lucratively than its rivals).</p>\n<p>Hence, Roblox directly competes for developers, creators, and engineering talent with gaming platforms (such as Epic Games, Unity, and Valve Corporation) that provide developers and creators the ability to create or distribute interactive content. I believe Roblox's comprehensive offering to build, publish, and operate experiences on its platform, free and easy-to-use technology, broad user reach, economic rewards system, brand, reputation for innovation, developer-centric culture, and Roblox's vision differentiates the company from its rivals.</p>\n<p>Now, let's find the fair value and expected returns for Roblox.</p>\n<p><b>Fair Value and Expected Return</b></p>\n<p>Roblox's bookings are the true reflection of its business, and so we will be analyzing the company using its bookings and not its revenue. In this case, the potential free cash flow margin is also based on bookings.</p>\n<p>Assumptions:</p>\n<table>\n <tbody>\n <tr>\n <td><p>Forward 12-month bookings [A]</p></td>\n <td><p>$2000 million</p></td>\n </tr>\n <tr>\n <td><p>Potential Free Cash Flow Margin [B]</p></td>\n <td><p>30%</p></td>\n </tr>\n <tr>\n <td><p>Average fully-diluted shares outstanding [C]</p></td>\n <td><p>~650 million</p></td>\n </tr>\n <tr>\n <td><p>Free cash flow per share [ D = (A * B) / C ]</p></td>\n <td><p>$0.923</p></td>\n </tr>\n <tr>\n <td><p>Free cash flow per share growth rate (conservative estimate)</p></td>\n <td><p>25%</p></td>\n </tr>\n <tr>\n <td><p>Terminal growth rate</p></td>\n <td><p>3%</p></td>\n </tr>\n <tr>\n <td><p>Years of elevated growth</p></td>\n <td><p>10</p></td>\n </tr>\n <tr>\n <td><p>Total years to stimulate</p></td>\n <td><p>100</p></td>\n </tr>\n <tr>\n <td><p>Discount Rate (Our \"Next Best Alternative\")</p></td>\n <td><p>9.8%</p></td>\n </tr>\n </tbody>\n</table>\n<p>Results:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9cd75274e4a1451cb432b96e0a8cfafb\" tg-width=\"611\" tg-height=\"734\"><span>Source: L.A. Stevens Valuation Model</span></p>\n<p>According to my estimation, Roblox's fair value is ~$58, i.e., it's trading at a premium of ~20%. In this market, high-growth tech stocks have been hammered, and there are great deals out there. And so buying Roblox at a premium doesn't make a lot of sense.</p>\n<p>To determine the expected returns, our model calculates a projected FCF per share value (year-10) and multiplies it with an assumed Price to FCF multiple (35x here), thereby generating a 2031 price target. Using this price target, the model generates an expected CAGR return for a ten-year investment.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/345f634512883a157361c590884202ee\" tg-width=\"611\" tg-height=\"432\"><span>Source: L.A. Stevens Valuation Model</span></p>\n<p>As you can see above, Roblox's share price could grow from ~$70 to ~$240 (~3.5x) at a CAGR of ~13.15% over the next decade. Since the expected return is lower than BTM's investment hurdle rate of 15%, I rate Robloxa modest buy to hold at $70.</p>\n<p>At such a large market cap, the company will require a few years for growth to catch up with its current valuation.</p>\n<p><b>Concluding Thoughts</b></p>\n<p>Let's conclude our discussion with a BTM Crucial Characteristics Check for Roblox:</p>\n<table>\n <tbody>\n <tr>\n <td><p>Crucial Characteristic</p></td>\n <td><p>Notes</p></td>\n </tr>\n <tr>\n <td><p>Visionary Founder/CEO</p></td>\n <td><p>David Baszucki (co-founder of Roblox) is a visionary technologist who has led Roblox as its CEO since its launch in 2006. Over the last five years, Roblox's popularity has exploded. However, David and his team are aggressively reinvesting in the Roblox platform (especially in engineering) to drive the next leg of growth for the company. Roblox's vision is to become a platform where billions of people share experiences (not just gaming) on a daily basis.</p><p>David is now 58, so we might have his leadership only for a few more years. Furthermore, all other C-suite executives (barring one or two) at Roblox are also well into their 50s. Therefore, I expect significant management changes at Roblox over the next decade. With that being said, I believe the Roblox platform is incredibly powerful, and the company's business model is so robust that even a chimp can run it successfully.</p></td>\n </tr>\n <tr>\n <td><p>Proprietary Tech</p></td>\n <td><p>Roblox's platform (Client, Studio, and Cloud) is powered by highly proprietary technology built over the last three decades. On any given day, more than 32M people use Roblox (DAUs) to connect via play.</p></td>\n </tr>\n <tr>\n <td><p>Network Effects</p></td>\n <td><p>The social component built into Roblox allows users to invite their friends and family to play with them and share experiences on the platform. A higher number of users attracts more developers to Roblox, which leads to more games (better content by variety and quality). These network effects remain the primary driver of Roblox's tremendous growth.</p></td>\n </tr>\n <tr>\n <td><p>Powerful Secular Growth Trend</p></td>\n <td><p>The growth of interactive, real-time 3D content across numerous industries (like Gaming, AR/VR, Architecture, 3D printing/Intelligent Manufacturing, etc.) is a powerful secular growth driver for Roblox.</p></td>\n </tr>\n <tr>\n <td><p>Sounds Financials</p></td>\n <td><p>In 2020, Roblox reported mind-boggling numbers in terms of revenue (~$923M, up ~82% y/y), bookings (~$1.8B, up ~181% y/y), and free cash flow (~$411M). However, the company expects stagnation in bookings in 2021 as the pandemic boost to gaming disappears. Roblox is already a free cash flow generative business, and the company has $800M+ on its balance sheet. Therefore, a direct listing made sense.</p><p>With 650M fully-diluted shares outstanding, Roblox's numbers fall short relative to its market cap. The stock is currently trading at a premium of 20% to its fair value, and its expected CAGR return of 13% falls below our investment hurdle rate.</p></td>\n </tr>\n <tr>\n <td><p>Branding</p></td>\n <td><p>Roblox is a global platform that has 130M Users (32.6M Daily Active Users). The Roblox platform gives individuals a strong sense of community and belonging through the rich, immersive co-experiences it provides. Roblox's growth is entirely organic (word-of-mouth), and this shows how the brand is truly loved by its customers.</p></td>\n </tr>\n <tr>\n <td><p>International Expansion</p></td>\n <td><p>Roblox is available globally; however, it has significant room to expand in underpenetrated geographies such as Europe, Latin America, Africa, and Asia. The joint venture with Tencent to bring Roblox to China will probably be the biggest growth driver for the company within the next few years.</p></td>\n </tr>\n </tbody>\n</table>\n<p>Roblox satisfies almost all of BTM's investment criteria, but at a market cap of $45B+, the valuation looks stretched. We do not shy away from paying a premium for a high-quality business if the expected return exceeds our hurdle rate; however, the expected return for Roblox is only 13% after the massive bounce in its price after going public.</p>\n<p>In recent years, direct listings (like Spotify(NYSE:SPOT)and Slack(NYSE:WORK)) have failed to generate massive performance in their first year as public companies and I expect Roblox to follow suit. The company's guidance for 2021 points to stagnation in bookings as the mobile gaming frenzy of 2020 fades away along with the pandemic. Therefore, I think we can wait for a better entry point on Roblox, which would be around its direct listing price of $45.</p>\n<p>Key Takeaway: I rate Roblox a hold to modest buy at $70.</p>\n<p>Thanks for reading. Please share your thoughts, questions, and/or concerns in the comments section.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Roblox: Building The Metaverse, But For Whom?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRoblox: Building The Metaverse, But For Whom?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-21 15:53 GMT+8 <a href=https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, who are often just average people with little in the way of coding skills, can build games on the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RBLX":"Roblox Corporation"},"source_url":"https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1170860218","content_text":"Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, who are often just average people with little in the way of coding skills, can build games on the platform and sell those games to users of the platform.\nThe platform has something of its own economy, in which Robux are used as currency to purchase games and for micro-purchases within those games.\nHistorically, a very young demographic has found the platform appealing, leading to questions about its ability to evolve upstream and create a true metaverse.\nRoblox has rapidly grown, and in this note, we provide a very deep and comprehensive exploration of the platform. Ultimately, we rate the company a modest buy.\n\nPhoto by Ian Tuttle/Getty Images Entertainment via Getty Images\nInvestment Thesis\nRoblox (RBLX) is a social gaming marketplace platform that connects gamers and developers. Through its global community of 8 million-plus developers, Roblox provides immersive gaming experiences that are shared by millions of gamers. In 2020, mobile gaming platforms like Roblox saw explosive growth in revenue as users flocked to these platforms during coronavirus-enforced lockdowns. A year of bookings stagnation awaits Roblox as demand for mobile gaming normalizes. However, AR/VR is just getting started, and the company has a long growth runway due to the large size of its TAM. Roblox is a free cash flow generation machine, as we will learn in this article, but the current valuation is a little too steep considering the weak guidance for 2021.\nHere's our investment thesis for Roblox:\n\nRoblox is a platform that enables users to enjoy millions of immersive 3D experiences (primarily games). Like YouTube, Roblox's content is user generated. Today, Roblox has more than 32M daily active users and 8M+ developers on its platform.\nRight from its inception in 2006, Roblox has been led by its visionary founder - David Baszucki. His vision for social gaming and shared virtual experiences is the driving force behind the company's admirable success.\nRoblox is a highly profitable business that's growing like a weed at scale. In 2020, Roblox's business was boosted by the coronavirus pandemic as mobile gaming saw exponential growth. However, the rise in mobile gaming is a secular growth trend. Furthermore, AR/VR technology is set to go mainstream over the coming years, which will likely help Roblox drive future revenue growth.\nThe Roblox platform is powered by advanced proprietary technology. Developers create content using Roblox Studio, and consumers (gamers) access this content through Roblox Client (interface to 3D digital worlds). Money is made through the sale of Roblox's virtual currency - Robux, which players use to make in-game purchases.\nFor 2021, Roblox is expecting revenue to grow from $923M to ~$1450M. However, the bookings are projected to rise by just 10% year-over-year (near-stagnation), and free cash flow is set to decline too. The company is well capitalized, and it's already free cash flow generative, so I do not foresee any significant dilutionary events for Roblox.\nDuring the recent correction in high-growth tech stocks, Roblox has surprisingly held on to its IPO bounce. There are many great deals out there in the market right now. However, Roblox is not one of them. The stock is trading at a premium of 20% to its fair value. Since the expected returns for Roblox is less than BTM's investment hurdle rate, I rate it hold at $70.\nRoblox is a great company, which I would buy on dips. At BTM, we will initiate a starter position below $60 (if we get such an opportunity). For now, Roblox is being added to our primary portfolio as a hold.\n\nIn today's article, we will study Roblox's business in detail, analyze its financials, and determine its fair value.\nIntroducing Roblox\nRoblox is a social gaming platform where an average of 37.1 million people from around the world come to play games with friends on a daily basis. While on Roblox, users can play, learn, explore, and communicate in user-generated virtual realities (games with 3D digital worlds) created by Roblox's community of 8M+ game developers. Roblox terms this emerging category as \"human co-experience\", which it considers to be the new form of social interaction (and this idea was envisioned by Roblox way back in 2004).\nThe Roblox platform is powered by user-generated content (like YouTube (GOOG)(NASDAQ:GOOGL)) and draws inspiration from gaming, entertainment, social media, and even toys. This emerging category is also referred to as the metaverse - a term often used to describe the concept of persistent, shared, 3D virtual spaces in a virtual universe. I discussed this concept in a note entitled, \"Introducing President Mark Zuckerberg.\"\nThe idea of a metaverse has been written about by futurists and science fiction authors for over 30 years. With the advent of increasingly powerful consumer computing devices, cloud computing, and high bandwidth internet connections, the concept of the metaverse is materializing.\nThe Roblox human co-experience platform serves as the underlying technology and infrastructure that supports shared experiences for millions of users, and it consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud.\n\nRoblox Client- The application that allows users to explore 3D digital worlds.\nRoblox Studio- The toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client.\nRoblox Cloud- The services and infrastructure that power the human co-experience platform.\n\nRoblox's mission is to build a human co-experience platform that enables shared experiences among billions of users. Since its inception, Roblox has invested heavily in building the Roblox platform, and ~80% of Roblox's employees are dedicated to maintaining, improving, and expanding the platform. The company is constantly improving the ways in which the Roblox platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers to how they are enjoyed and safely accessed by users across the globe.\nAccording to Roblox's S-1 filing, the Roblox platform is differentiated through a number of key characteristics, which are mentioned below (the following are quoted from the company's S-1 linked just a moment ago):\n\nIdentity:All users have unique identities in the form of avatars that allow them to express themselves as whoever or whatever they want to be. These avatars are portable across experiences.\n\n\nFriends: Users interact with friends, some of whom they know in the real world, and others who they meet on Roblox.\n\n\nImmersive\n:\nThe experiences on Roblox are 3D and immersive. As we continue to improve the Roblox Platform, these experiences will become increasingly engaging and indistinguishable from the real world.\n\n\nAnywhere: Users, developers, and creators on Roblox are from all over the world, including North America, Europe, South America, Asia, Australia, and Africa. In 2019, we entered into a joint venture agreement with Songhua River Investment Limited, or Songhua, an affiliate of Tencent, to operate a Chinese version of the Roblox Platform that will be operated and published in China by Tencent under the name “Luobulesi.” Further, as of December 31, 2020, the Roblox Client operates on iOS, Android, PC, Mac, and Xbox, and supports VR experiences on PC using Oculus Rift and HTC Vive headsets.\n\n\nLow Friction: It is simple to set up an account on Roblox and free for users to enjoy experiences on the platform. Users can quickly traverse between and within experiences either on their own or with their friends. It is also easy for developers to build experiences and then publish them to the Roblox Cloud so that they are then accessible to users on the Roblox Client across all platforms. On behalf of the developers and creators, Roblox also provides critical services such as user acquisition, billing, collections, content moderation, translation, safety, regulatory compliance, and customer support. This makes it easier and simpler for even individual developers and creators and small studios to be successful developers and creators.\n\n\nVariety of Content: Roblox is a vast and expanding universe of developer and creator-built content. As of Dec. 31, 2020, there were over 20 million experiences on Roblox, and in the year ended Dec. 31, 2020, over 13 million of these were experienced by our community. These ranged from experiences that simulate building and operating a theme park to adopting a pet, scuba diving, creating and playing your own superhero, and more. There also are millions of creator-built virtual items, such as hats, shirts, and pants, with which users can personalize their avatars and 3D virtual items, assets, and sounds that creators can incorporate into experiences. Historically, Roblox has also created virtual items with which users can personalize their avatars. Our focus today and going forward, however, is on user-generated content.\n\n\nEconomy: Roblox has a vibrant economy built on a currency called Robux. Users who choose to purchase Robux can spend the currency on experiences and on items for their avatar. Developers and creators earn Robux by building engaging experiences and compelling items that users want to purchase. Roblox enables developers and creators to convert Robux back into real-world currency.\n\n\nSafety: Multiple systems are integrated into the Roblox Platform to promote civility and ensure the safety of our users. These systems are designed to enforce real-world laws and are designed to extend beyond minimum regulatory requirements.\n\nThe revenue growth at Roblox has been driven primarily by significant investments in technology and two mutually reinforcing network effects: content and social.\nSource:Roblox S-1\nRoblox's platform is powered by user-generated content that's built by an engaged community of developers and creators. As Roblox's developers and creators build increasingly high-quality content, more users are attracted to their platform. The more users on the platform, the higher the engagement and the more attractive Roblox becomes to developers and creators. With more users, more Robux (Roblox's virtual currency) is spent on the platform, which in turn incentivizes developers to build more engaging content for users and attracts new developers and content creators to the Roblox developer community.\nThe social nature of Roblox's platform makes it special. Roblox's users typically play with friends, and this inspires them to invite more friends to the platform, who, in turn, invite their friends, driving organic growth. A higher number of friends on the platform leads to increased long-term user engagement. Therefore, more and more users join Roblox's platform through word-of-mouth marketing from their existing friends using the platform.\nNow that we have an understanding of Roblox's platform, let's see how Roblox's economy functions, in other words, how Roblox makes money:\nRoblox is powered by exclusive user-generated games that include personalized avatars. Upon joining Roblox, gamers can personalize their avatars by choosing body types, clothes, and other accessories. To do so, the gamers purchase a virtual currency (Robux) from within Roblox's platform. Game developers and content creators earn Robux through microtransactions in their games, such as selling in-game virtual items and engagement-based rewards. Through Roblox's Developer Exchange Program, developers can exchange Robux for real-world currency. This is how money flows from gamers to developers on Roblox's platform.\nThe income generated through Roblox empowers game developers (individuals and game studios) to invest in higher-quality content, which attracts more gamers to Roblox. Having enjoyed Roblox, users tend to invite more friends to play on the platform, and this helps game developers attract larger audiences. According to Roblox, many users eventually become developers on the platform, and nearly all Roblox developers started as users. Therefore, Roblox has a robust community and a vibrant economy.\nRoblox supports its developer community by providing tools to create, publish, operate, and monetize content (games and experiences). In 2020, more than 1.25M developers earned Robux, and ~4,300 developers qualified for Roblox's Developer Exchange Program, making them eligible to exchange their earned Robux for real-world currency. To qualify for the Developer Exchange Program, the developers need to meet certain conditions, such as:\n\nEarn at least 100,000 Robux,\nVerified developer account, and\nAccount must be in good standing.\n\nIn 2020, more than 3300 developers exchanged Robux for real-world currency. According to Roblox's disclosures, 1,250-plus developers earned more than $10K in 2020, whereas 300-plus developers made more than $100K in the same period.\nGenerally, Roblox users can create an avatar and explore experiences for free after joining the platform. However, the business model for any given game is decided by its developer. Within these free games, users can spend Robux to purchase in-game enhancements and items such as clothing, gear and emotes, from Roblox's Avatar Marketplace. As you may already know, Roblox retains a portion of every Robux transaction and distributes the rest to developers.\nImportant Note: Robux can only be purchased from Roblox at a price set by Roblox and can only be spent within its platform.\nKey Disclosure from Roblox in relation to Robux:\nOther than daily and monthly limitations to prevent fraud, there's no cap on the number of Robux that any user or users in the aggregate can purchase. Robux has no monetary or intrinsic value outside of our platform and can only be converted to US dollars through our Developer Exchange Program. We're aware that some users seek to use unauthorized third-party websites to exchange Robux for real-world currency, which is not permitted under our terms of use. We regularly monitor and screen usage of our platform with the aim of identifying and preventing these activities, as well as regularly send cease-and-desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers.\nSource:Roblox S-1\nGamers primarily purchase Robux in two ways: 1. One-time purchases or 2. Roblox Premium subscription service. Roblox accepts payments through (Apple’s and Google’s) app stores, credit cards, and debit cards. In 2020, the average price for a Robux was $0.01. Roblox Premium is billed monthly, and this subscription service includes discounts on Robux purchases, exclusive access to certain in-experience benefits, some exclusive and discounted marketplace items, and the ability to buy, sell and trade certain Avatar items. In 2020, Roblox’s bookings (sale of Robux) came in at $1.8B, which means that Roblox’s ~140M users spent an average of $12.85 on the platform (the average revenue per daily active users is much higher at about $60).\nFor developers, Robux is considered \"earned\" if and when a developer receives them as payments for a bonafide third-party transaction for virtual goods through the Roblox Platform. Currently, developers can earn Robux via the following mechanisms:\n\nSale of access to experiences (games) and in-game enhancements,\nEngagement-based payouts for the amount of time that Roblox Premium subscribers spend in their experiences,\nSale of content and tools within the developer community, and\nSale of virtual items to gamers through the Avatar Marketplace.\n\nAs Roblox users’ purchase and spend Robux on the platform, developers receive 70% of the Robux spent within their games and 70% of the Robux spent on Roblox's Studio Marketplace items. Content creators receive only 30% of the Robux spent for their Avatar Marketplace items. The earned Robux are deposited into the virtual accounts of the developers and creators, who (if qualified) can convert Robux into U.S. dollars at an exchange rate which is (again) set by Roblox (in its sole discretion) at 1 Robux to $0.0035 (conversion price as of Dec. 31, 2020).\nAs you may remember, the average purchase price of a Robux was $0.01 in 2020, and now we know that developers can exchange a Robux for $0.0035 (35% of Robux’s purchase price). Therefore, the unit economics are undoubtedly tilted in favor of Roblox, and the virtual economy built within Roblox’s ecosystem gives the company massive controlling power.\nIn 2020, Roblox’s qualified developers (Developer Exchange Program) earned $328.7M, up from $112M in 2019. The growth in developer earnings resulted from a growth in qualified developers, a rise in DAUs, and higher engagement with consumers. As an aside, Roblox’s developers do not always cash out their Robux into real-world currency as they can reinvest their Robux into developer tools available in the Studio Marketplace, promote their games through Roblox’s internal ad network, or spend the Robux as any other Roblox gamer would (on experiences and in-game purchases).\nThe Roblox platform combines significant bookings (sale of Robux) (and, by extension, revenue) with strong unit economics to generate massive amounts of free cash flow.\nRoblox Had A Great 2020, But What Next?\nIn 2020, the coronavirus pandemic boosted the mobile gaming industry as people (kids, to be precise) stayed home during lockdowns. Roblox's social gaming platform saw an influx of new users, and bookings shot up to over $2B. As you can see, Roblox's revenues grew by 81% y/y to $923M last year.\nSource:Roblox S-1\nThe rapid revenue growth is attributable to an increase in numbers of active users and higher user engagement (and spending). Roblox's DAUs went up from 19M to 37M within a year, while average bookings per DAU shot up to $17.30 from $12.37. For Q4, total hours engaged came in at 8.4B hours, a figure that represented substantial growth on a y/y basis; however, it also represented a q/q decline.\nSource:Roblox S-1\nAlthough Roblox's operations continue to lose money, the company is actually generating massive amounts of free cash flow. The bookings made on Roblox's platform convert to revenue over time as in-game virtual goods are consumed or amortized (in accordance with the average life of the consumer).\nSource:Roblox S-1\nOn the back of ultra-strong numbers in 2020, Roblox's public listing seems to be timed to perfection. From a reference price of $45, the stock rallied higher on the direct listing day and has continued to trade up at ~$65-80 range. Here's what Roblox's CEO had to say on the listing:\nSource:Roblox CEO David Baszucki on the company's Wall Street debut\nRoblox's growth numbers for 2020 were mind boggling. However, the expectations for 2021 are lukewarm (and rightly so). With the pandemic fading away, people are returning towards normality, and a reduction in hours spent on gaming is a certainty.\nFor 2021, Roblox is expecting DAU growth of just 6%, with flat numbers for hours engaged. Although the company expects revenue to grow by 60% y/y, bookings (closer estimation of Roblox's actual growth) are expected to grow at just 10% y/y.\nSource:Roblox S-1\nAs bookings growth moderates and the company spends more on R&D to drive future growth, the company's free cash flow is set to decline in 2021. Therefore, I would not expect fireworks to continue for Roblox's stock over the coming year as it faces tough comps.\nSource:Roblox S-1\nWith that being said, Roblox's growth story is far from over. In fact, I can envision a very long growth runway for Roblox (similar to Unity). The growth of interactive, real-time 3D content across numerous industries (like Gaming, Architecture, 3D printing/Intelligent Manufacturing, AR/VR, and many more) will drive the demand for Roblox's platform higher over the coming years.\nSource:Newzoo\nIn 2020, mobile gaming was the fastest-growing industry among all forms of gaming, and it's now believed to be worth $77.2B. And by 2025, it's expected to be worth$150B per annum. Naturally, Roblox will benefit from the rapid growth in mobile gaming. Therefore, Roblox is supported by a very powerful secular growth trend, i.e., the rise of mobile gaming.\nHowever, the real upside for Roblox's platform will come from the mainstream adoption of AR/VR technology. These markets are set to see explosive growth over upcoming years:\nSource:DevTeam\nEconomically viable virtual realities are already all around us in that games are massively profitable and are pseudo-virtual realities. I believe that this market will actually accelerate as wide-scale adopted virtual realities begin popping up over the next decade or two, many of which will likely be built atop platforms such as Roblox and Unity.\nAlthough I like Unity, I believe that Roblox's platform has greater potential due to the democratization of content generation. Roblox is transforming the world of interactive gaming by changing how people express themselves, play, socialize, learn, and transact together. According to the management, Roblox is currently focused on the following growth initiatives:\n\nPlatform Extension: Roblox is continually investing to extend its platform. These investments include high fidelity avatars, 3D spatial audio technology, and additional social features. In the future, Roblox can expand into other areas like entertainment, e-learning (education), and enterprise work communications. For example, developers will be able to create and host virtual meetings, classrooms, concerts, and conferences on the Roblox platform.\nAge Demographics Expansion: Today, a large chunk of Roblox’s users are kids below the age of 13. However, platform extension will enable developers to build higher quality experiences (games and other content) that are curated to meet the needs of an older age demographic. If Roblox can successfully increase its penetration among other older age categories, then it can easily grow at swashbuckling rates for years to come.\nInternational Reach: Roblox already is a global platform. However, there's still significant potential for the company to grow in international markets. Today, almost all of Roblox’s revenue comes from the United States, Canada, and United Kingdom. Hence, there are big markets for Roblox to expand its presence. Roblox is expecting the same organic, word-of-mouth user and developer growth in international markets that the platform has experienced in its primary markets. Additionally, Roblox is making massive investments in technology to enhance growth across the globe. For example, features such as built-in regional compliance and automated language translation can enable Roblox to scale operations in global markets, allowing developers to publish games (or content) in multiple languages and allowing users (speaking different languages) to communicate effectively. Roblox’s greatest international opportunity today is China, and the company is addressing this opportunity through a joint venture with Songhua (an affiliate of Tencent, which is one of the leading internet companies in China).\nMonetization: Roblox believes that its platform has massive monetization potential. To improve monetization, Roblox is actively working with the developer community. Furthermore, Roblox is taking up new strategic initiatives such as the Roblox Premium subscription service to enhance retention of paying users and conversion of free users to paying users. Finally, Roblox is working with leading brands (like Warner Bros, NFL, Netflix, Marvel, WWE, and FC Barcelona) to build unique marketing opportunities on the Roblox Platform through branded content.\n\nHence, Roblox will likely resume robust bookings growth after the projected slowdown in 2021. As you may know, Roblox competes for both users, developers, and creators. Roblox competes to attract and retain its users' attention on the basis of content and user experiences. Therefore, Roblox competes for users and their engagement hours with global technology leaders such as Amazon, Apple, Google, Microsoft, Facebook, and Tencent, global entertainment companies such as Disney, Comcast, and ViacomCBS, global gaming companies such as Electronic Arts, Activision Blizzard, Take-Two, Unity, Valve, and Zynga, online content platforms including Spotify, Netflix, and YouTube, as well as social platforms such as Facebook, Snap, and Pinterest.\nFor now, Roblox is out-competing its rivals due to many factors such as personalization of user experience, content variety, and social features. However, Roblox is heavily reliant on developers for the content that leads to the creation and maintenance of user engagement on its platform. Hence, Roblox has to compete with other platforms like Unity to attract and retain developers. Therefore, Roblox has to provide advanced tools needed to build, publish, operate, and monetize content (more efficiently and more lucratively than its rivals).\nHence, Roblox directly competes for developers, creators, and engineering talent with gaming platforms (such as Epic Games, Unity, and Valve Corporation) that provide developers and creators the ability to create or distribute interactive content. I believe Roblox's comprehensive offering to build, publish, and operate experiences on its platform, free and easy-to-use technology, broad user reach, economic rewards system, brand, reputation for innovation, developer-centric culture, and Roblox's vision differentiates the company from its rivals.\nNow, let's find the fair value and expected returns for Roblox.\nFair Value and Expected Return\nRoblox's bookings are the true reflection of its business, and so we will be analyzing the company using its bookings and not its revenue. In this case, the potential free cash flow margin is also based on bookings.\nAssumptions:\n\n\n\nForward 12-month bookings [A]\n$2000 million\n\n\nPotential Free Cash Flow Margin [B]\n30%\n\n\nAverage fully-diluted shares outstanding [C]\n~650 million\n\n\nFree cash flow per share [ D = (A * B) / C ]\n$0.923\n\n\nFree cash flow per share growth rate (conservative estimate)\n25%\n\n\nTerminal growth rate\n3%\n\n\nYears of elevated growth\n10\n\n\nTotal years to stimulate\n100\n\n\nDiscount Rate (Our \"Next Best Alternative\")\n9.8%\n\n\n\nResults:\nSource: L.A. Stevens Valuation Model\nAccording to my estimation, Roblox's fair value is ~$58, i.e., it's trading at a premium of ~20%. In this market, high-growth tech stocks have been hammered, and there are great deals out there. And so buying Roblox at a premium doesn't make a lot of sense.\nTo determine the expected returns, our model calculates a projected FCF per share value (year-10) and multiplies it with an assumed Price to FCF multiple (35x here), thereby generating a 2031 price target. Using this price target, the model generates an expected CAGR return for a ten-year investment.\nSource: L.A. Stevens Valuation Model\nAs you can see above, Roblox's share price could grow from ~$70 to ~$240 (~3.5x) at a CAGR of ~13.15% over the next decade. Since the expected return is lower than BTM's investment hurdle rate of 15%, I rate Robloxa modest buy to hold at $70.\nAt such a large market cap, the company will require a few years for growth to catch up with its current valuation.\nConcluding Thoughts\nLet's conclude our discussion with a BTM Crucial Characteristics Check for Roblox:\n\n\n\nCrucial Characteristic\nNotes\n\n\nVisionary Founder/CEO\nDavid Baszucki (co-founder of Roblox) is a visionary technologist who has led Roblox as its CEO since its launch in 2006. Over the last five years, Roblox's popularity has exploded. However, David and his team are aggressively reinvesting in the Roblox platform (especially in engineering) to drive the next leg of growth for the company. Roblox's vision is to become a platform where billions of people share experiences (not just gaming) on a daily basis.David is now 58, so we might have his leadership only for a few more years. Furthermore, all other C-suite executives (barring one or two) at Roblox are also well into their 50s. Therefore, I expect significant management changes at Roblox over the next decade. With that being said, I believe the Roblox platform is incredibly powerful, and the company's business model is so robust that even a chimp can run it successfully.\n\n\nProprietary Tech\nRoblox's platform (Client, Studio, and Cloud) is powered by highly proprietary technology built over the last three decades. On any given day, more than 32M people use Roblox (DAUs) to connect via play.\n\n\nNetwork Effects\nThe social component built into Roblox allows users to invite their friends and family to play with them and share experiences on the platform. A higher number of users attracts more developers to Roblox, which leads to more games (better content by variety and quality). These network effects remain the primary driver of Roblox's tremendous growth.\n\n\nPowerful Secular Growth Trend\nThe growth of interactive, real-time 3D content across numerous industries (like Gaming, AR/VR, Architecture, 3D printing/Intelligent Manufacturing, etc.) is a powerful secular growth driver for Roblox.\n\n\nSounds Financials\nIn 2020, Roblox reported mind-boggling numbers in terms of revenue (~$923M, up ~82% y/y), bookings (~$1.8B, up ~181% y/y), and free cash flow (~$411M). However, the company expects stagnation in bookings in 2021 as the pandemic boost to gaming disappears. Roblox is already a free cash flow generative business, and the company has $800M+ on its balance sheet. Therefore, a direct listing made sense.With 650M fully-diluted shares outstanding, Roblox's numbers fall short relative to its market cap. The stock is currently trading at a premium of 20% to its fair value, and its expected CAGR return of 13% falls below our investment hurdle rate.\n\n\nBranding\nRoblox is a global platform that has 130M Users (32.6M Daily Active Users). The Roblox platform gives individuals a strong sense of community and belonging through the rich, immersive co-experiences it provides. Roblox's growth is entirely organic (word-of-mouth), and this shows how the brand is truly loved by its customers.\n\n\nInternational Expansion\nRoblox is available globally; however, it has significant room to expand in underpenetrated geographies such as Europe, Latin America, Africa, and Asia. The joint venture with Tencent to bring Roblox to China will probably be the biggest growth driver for the company within the next few years.\n\n\n\nRoblox satisfies almost all of BTM's investment criteria, but at a market cap of $45B+, the valuation looks stretched. We do not shy away from paying a premium for a high-quality business if the expected return exceeds our hurdle rate; however, the expected return for Roblox is only 13% after the massive bounce in its price after going public.\nIn recent years, direct listings (like Spotify(NYSE:SPOT)and Slack(NYSE:WORK)) have failed to generate massive performance in their first year as public companies and I expect Roblox to follow suit. The company's guidance for 2021 points to stagnation in bookings as the mobile gaming frenzy of 2020 fades away along with the pandemic. Therefore, I think we can wait for a better entry point on Roblox, which would be around its direct listing price of $45.\nKey Takeaway: I rate Roblox a hold to modest buy at $70.\nThanks for reading. Please share your thoughts, questions, and/or concerns in the comments section.","news_type":1},"isVote":1,"tweetType":1,"viewCount":435,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":131516816,"gmtCreate":1621867078035,"gmtModify":1704363589288,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"Monitoring ","listText":"Monitoring ","text":"Monitoring","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/131516816","repostId":"1154364832","repostType":2,"repost":{"id":"1154364832","pubTimestamp":1621824866,"share":"https://ttm.financial/m/news/1154364832?lang=&edition=fundamental","pubTime":"2021-05-24 10:54","market":"us","language":"en","title":"Sea Limited Is Ready To Fire On All Cylinders","url":"https://stock-news.laohu8.com/highlight/detail?id=1154364832","media":"seekingalpha","summary":"SummarySea Limited continues to extend its leadership across all its business segments with a blockb","content":"<p>Summary</p><ul><li>Sea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.</li><li>Investors need to pay attention to its potential cash flow margins that could far exceed even AMZN and MELI.</li><li>At the current price, investors are getting a bargain even at the bear case of its fair value range with a DCF framework.</li></ul><p><img src=\"https://static.tigerbbs.com/04fbbc1a372c45d5d8e903015e5b0dfe\" tg-width=\"768\" tg-height=\"512\" referrerpolicy=\"no-referrer\">Photo by Wachiwit/iStock Editorial via Getty ImagesInvestment Thesis</p><p>Sea Limited (SE) has fallen about 13% from its all-time high. The company has continued to dominate its markets and looks certain to further extend its leadership position and expand its verticals to take even more market share away from its competitors. Investors should take advantage of the consolidation to initiate or add positions to this potential massive cash flow generator.</p><p><b>Earnings Review and What To Look Out For?</b></p><p>Sea Limited is the largest integrated Internet company in South East Asia, with operations spanning across gaming, e-commerce, and fintech.</p><p>The company’s recent Q1’21 results were another blockbuster across all business segments, demonstrating the company’s strong leadership and well-executed growth strategies towards itsvision:</p><blockquote>We think we stand in the best position to capitalize on the opportunity to build the largest consumer Internet ecosystem in the region. And we'll continue to focus on executing on our core businesses as well as building those ecosystems.</blockquote><p>As a reminder, for its e-commerce segment Shopee, Sea considers its region to comprise the following markets: Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore, of which Indonesia is the company’s largest market.</p><p>For its gaming segmentGarena, the company’s largest and growing markets comprise Southeast Asia, Taiwan, Brazil, Mexico, India, North America, Russia, and the Middle East.</p><p><img src=\"https://static.tigerbbs.com/932ec3694e935afbfa643e9c904ce964\" tg-width=\"1280\" tg-height=\"636\" referrerpolicy=\"no-referrer\">SE’s Quarterly Results. Data Source: S&P Global Market Intelligence</p><p>Q1’21 YoY revenue growth accelerated to 146.7%. In fact, Q1’21 is the 11th consecutive quarter of >100% YoY revenue growth. The company’s main revenue driverGarena recorded a 111.4% YoY rise, while Shopee and other services recorded a 189.8% YoY increase.</p><p>Gross margin also improved significantly compared to the prior year. Q1’21 gross margin came in at 36.6% as compared to 28.9% a year ago. In its respective segments, Garena’s gross margin also improved to 68.2% from 38.6% a year ago, while Shopee’s gross margin went up to 13.7% from 7.1% a year ago.</p><p><img src=\"https://static.tigerbbs.com/6d9651b44ee4d09b2dcf3d8c49e72213\" tg-width=\"1280\" tg-height=\"629\" referrerpolicy=\"no-referrer\"></p><p>SE’s LTM results. Data Source: S&P Global Market Intelligence</p><p>Looking across the longer-term trend using the LTM basis, we could also see similar fantastic top line performance. LTM YoY revenue growth came in at 113.7%, and gross margin also improved to 33% compared to 30.4% a year ago. Therefore, investors should be encouraged to know that Sea’s top line performance has been consistently getting better and better even as it scaled up fast, improving its cost of revenue ratio, showing just how capable the company is in being able to execute its growth strategies across multiple countries within its region.</p><p>Investors may want to continue paying attention to the company’s sales and marketing spend as it still accounted for the majority of the operating expenses in both the Q and LTM results, respectively. More importantly, sales and marketing spend as a percentage of revenue has continued to fall as the company scaled up, reflecting improving cost efficiencies over time.</p><p><img src=\"https://static.tigerbbs.com/695523a022549fe176d5ac4f89f3c4cb\" tg-width=\"1004\" tg-height=\"558\" referrerpolicy=\"no-referrer\"></p><p>SE’s OPEX as a % of Revenue (LTM Trend). Data Source: S&P Global Market Intelligence</p><p>This has certainly helped to improve the company’s overall cost efficiencies over time, showing clearly the benefits of economies of scale of the company’s business model. LTM sales and marketing spend improved to 40.6% of revenue from 43.3% a year ago, while LTM overall operating expenses improved to 59.9% of revenue from 67.4% a year ago.</p><p>This has helped to narrow the company’s LTM negative operating margin to -27% from -37%. Investors should be reminded not to focus on SE’s near-term operating margins as a gauge of the company’s core operating performance. This is because the company is still in the early stages (despite growing so rapidly) of penetrating Southeast Asia’s massive e-commerce market, of which it is the clear leader currently. The company is expected to continue investing heavily in sales and marketing, in order to drive the massive potential for growth in the region and to establish itself as the future undisputed e-commerce leader in the region taking the large majority of the pie, leaving the rest of its competitors to only be able to compete in their much smaller respective niche market segments, just like what Amazon (AMZN) had done in its established markets.</p><p>In fact, Sea’s CEOForrest Li, who was named “Singapore Businessman of the Year at the 35th Singapore Business Awards in Nov 20” added:</p><blockquote>Let me put it this way, it (Shopee) can be profitable anytime. But I think what's really important to us is we think it's still very early days for e-commerce development. We are in a very good situation because Garena has been profitable - actually it's pretty profitable, and this gives us the resources to invest in Shopee, invest in SeaMoney. I think pretty soon, Shopee will turn to be profitable as well. In certain markets, like Taiwan, it's already profitable. And then we will have more resources; two cash flow generators: Garena and Shopee. This allows us to continually invest in future opportunities.</blockquote><p>I have previously discussed (articles listedhereandhere) how important it is for investors to focus on cash flows for companies with massive scalability potential like Coupang (CPNG) and Opendoor Technologies (OPEN) which are still in their early days of penetrating their respective markets.</p><p>It is the same focus for Sea as we attempt to delve deeper into its cash flow generating ability. Sea uses Adjusted EBITDA to report its cash flow performance. I will present the discussion from FCF and EBITDA point of view first as a matter of consistency, before going over to the Adjusted EBITDA metrics.</p><p><img src=\"https://static.tigerbbs.com/ae1db2d81fcf921eaba649f93cbbf9e0\" tg-width=\"1280\" tg-height=\"601\" referrerpolicy=\"no-referrer\"></p><p>SE’s LTM CFO Margin and LTM FCF Margin. Data Source: S&P Global Market Intelligence</p><p>A quick glance over to its cash flow statement unveiled just how well-performing SE has been with its cash flow management. In fact, SE’s CFO and FCF performance has been improving remarkably over time as it scaled up quickly, and the company is just getting started. Its LTM CFO margins have been steadily improving over the previous year from -5.36% to 17.28% for the Q1’21 quarter. In addition, its LTM FCF margins also improved steadily over the previous year from -13.4% to 11.08%.</p><p><img src=\"https://static.tigerbbs.com/2c3f20175798dec1212a5aac70feb8cc\" tg-width=\"1280\" tg-height=\"826\" referrerpolicy=\"no-referrer\"></p><p>SE’s EBITDA Margin & EBIT Margin. Data Source: S&P Global Market Intelligence</p><p>When we move over to its EBITDA margins, the improvement in trend of its core operating performance is also clearly discernible. Although it has yet to turn EBITDA positive, it was due mainly to necessary investments in sales and marketing.</p><p><img src=\"https://static.tigerbbs.com/5b82c3c4bf6f1a5698e05c68eaddbe2e\" tg-width=\"1280\" tg-height=\"819\" referrerpolicy=\"no-referrer\"></p><p><b>SE’s CapEx Margin & CFO Margin. Data Source: S&P Global Market Intelligence</b></p><p>SE has also benefited from the huge improvement in its core operating performance as seen in its CFO margin trend, while its heavy earlier CapEx investments have started to bear fruit as it scaled, as the CapEx margin is trending lower, and its CFO will now be able to sustain its CapEx moving forward.</p><p>It’s very clear that SE’s business has well cleared its inflection point of heavy investments to scale up, and the company is well on its way to generate huge cash flows in the future as it continues to power ahead in its market penetration.</p><p><img src=\"https://static.tigerbbs.com/88fb528aaddb4c6a12d219ac9c2e9f64\" tg-width=\"1280\" tg-height=\"730\" referrerpolicy=\"no-referrer\"></p><p>SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market Intelligence</p><p>Moving ahead, we can also see that SE’s forward EBITDA margin trend is expected to significantly expand, while CapEx margin is expected to continue to fall. The company is on track to be a massive cash flow generator, with EBITDA margin expected to be about 43.8% by FY 30. Therefore, investors must be aligned with Sea’s long-term vision of focusing on growing its cash flows as it continues to penetrate the region’s markets. Based on its current growth trajectory, SE’s cash flow generating potential looks massive.</p><p><img src=\"https://static.tigerbbs.com/46dd783ffd94d877ef749555e8869764\" tg-width=\"1280\" tg-height=\"735\" referrerpolicy=\"no-referrer\"></p><p>AMZN’s & SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market Intelligence</p><p>When we bring in AMZN’s forecasts, I believe investors can clearly see what I mean. AMZN is already quite profitable based on its EBITDA margin, while SE’s EBITDA margin profitability is probably just getting started and SE is expected to grow its EBITDA margins much faster than AMZN, and this only goes to show the tremendous potential of the markets that SE is operating in. Investors are clearly reminded to give Shopee time to scale up to deliver the kind of cash flow profitability that will drive future returns.</p><p><img src=\"https://static.tigerbbs.com/37f1f59f3a8d0e8ef6e74b521330d9f7\" tg-width=\"1280\" tg-height=\"714\" referrerpolicy=\"no-referrer\">SE’s Adjusted EBITDA. Source: SE 6-K</p><p>As we move on to the segmented Adjusted EBITDA presented by the company, we can then infer what SE CEO Forrest Li meant by “Garena providing the resources for the company to invest in Shopee and SeaMoney.”</p><p>The company is continuing to build on Garena’s success to deliver the resources needed to invest in Shopee and SeaMoney. Investors should consider Shopee and SeaMoney as an entity because they have tremendous synergies and are each other’s flywheel. Garena offers clear cash flow visibility for Shopee and SeaMoney to grow.</p><p>Garena’s bookings reached $1.1B in Q1’21, which represents a 117.4% YoY increase. The bookings consist of current revenue and change in deferred revenue, the part which provides visibility into future revenue recognition.</p><p>As can be seen, based on Adjusted EBITDA, which also included change in deferred revenue, SE has turned profitable. Unlike many other e-commerce companies or internet companies, SE already has a cash flow profitable Garena segment to provide the resources to drive its e-commerce and fintech segment growth. This combination is extremely powerful and, coupled with the company’s remarkable execution, has already brought FCF profitability to its operations, and soon EBITDA profitable. This will certainly allow SE to push even harder to drive more sustainable investments into more verticals and products to expand its ecosystem and further reduce the share of the pie available and pull itself further away from its closest competitors.</p><p>Therefore, investors must continue to pay attention to the key growth drivers in Garena, and how the company intends to stretch its leadership further to protect its key cash flow generator until Shopee and SeaMoney become self-sustainable.</p><p><img src=\"https://static.tigerbbs.com/3291643e2334f5cf171810ba13d16ca2\" tg-width=\"1100\" tg-height=\"604\" referrerpolicy=\"no-referrer\"></p><p>Shopee’s Adjusted EBITDA per order. Source:Techinasia</p><p>As Shopee continues to drive its fast expansion across the region, its unit economics have continued to improve remarkably, as it achieved operating efficiencies over time, leading to further reductions in Adjusted EBITDA loss per order. For Q1’21, the Adjusted EBITDA loss per order improved to $0.38, which represents a 38% YoY decline. As the company has guided earlier, it would not be long before Shopee achieves self-sustaining EBITDA profitability.</p><p><b>What’s Next for Garena?</b></p><p>At the Pocket Gamer Awards 2021, Garena received the Best Mobile Publisher Award, and Free Fire was also named the Best Battle Royale Game.</p><p>Yet, according to the company, Garena’s most popular self-developedFree Fireis</p><blockquote>still at an early stage of driving growth on the user base as well as pay user base for this game and developing it into a social platform where people not only come to play the core gameplay, but also enjoy other modes hangout, listen to music, social lives.”</blockquote><p>The company’s focus on Free Fire is notable as it is Garena’s most important revenue driver. Therefore the ability to scale Free Fire beyond just a game but into a social platform would bring Free Fire into its next phase of growth while continuing to grow its active user base and paying users. Sea also emphasized that the company continues to see “stickiness” in its active user metrics as the average active user spends about 2 to 3 hours daily on its platform. Not only has Garena grown its quarterly paying users 123.5% YoY, its quarterly paying users also represented 12.3% of quarterly active users (QAU) for Q1’21 as compared to 8.9% a year ago. Therefore driving the stickiness of the platform and encouraging more time spent among its active users would help to drive its paying user ratio up.</p><p>Sea believes that one of the key factors that could help to drive Garena towards its vision of a social platform is dramatically increasing its modes of engagement with its users. This is not just restricted to online activities, but also offline community engagement programs. The whole intent is to develop a “broad-based platform stickiness” beyond its top active users, by building and growing the platform into a much larger community and provide the users ample opportunities to socialize and engage through its ongoing content development, and its promotion of community engagement.</p><p>A key aspect of its community engagement strategies is focused on eSports. Sea believes that it operates the “largest mobile-game professional league in Southeast Asia, Taiwan and Brazil” and Free Fire was also named the “eSports Mobile Game of the Year at the eSports Awards 2020”. (Source: SE 20-F). The company continues to hold very large-scale eSports tournaments and events to strengthen its community engagement strategies such as Free Fire League Latinoamerica 2021, and its flagship Garena World event in April. On the 28th May, theFree Fire World Series 2021 Singapore(FFWS 2021 SG), which is Free Fire’s most prestigious eSports tournament, will take place in Singapore with a massive prize pool of US2M. Sea is showing no signs of ever letting the company’s most important revenue driver and most profitable segment to slip through its grip. Instead, it continues to build on its success as the leading eSports organizer in its markets.</p><p>Garena is also looking way beyond the success of Free Fire and is constantly developing its games portfolio pipeline through constant R&D and product development with its “significant number of our more than 1,000 in-house game developers globally are constantly working on new ideas, while we continue to engage with third-party game studios for collaboration on promising and complementary game development and publishing opportunities.” (Source: SE Q1’21 earnings transcript)</p><p><b>Expanding Shopee’s Global Footprint and Verticals</b></p><p>Sea is actively expanding its presence in LatAm’s largest e-commerce market:Brazil, taking on MercadoLibre (MELI) in its most important market and with eyes on the whole LatAm. Although Sea is a relatively new player in e-commerce, having set up Shopee only in2015, the company is no stranger to taking on big incumbents. Shopee has already unseated the incumbent Alibaba-backed (BABA)Lazadaas the number one e-commerce platform in Southeast Asia. In addition, in its most important market, Indonesia, the company has also unseated incumbent Tokopedia as the leader, and Shopee was also recently reported to be themost visited e-commerce websiteamong Indonesian consumers in 2020.</p><p>Sea further highlighted that the company continued to rank first in MAU and total time spent on apps in the shopping category across its markets in Southeast Asia, and in Indonesia it also recorded its fastest quarterly YoY growth rates on record. (Source: SE Q1’21 earnings transcript)</p><p>Therefore, Sea is an extremely well-managed company, capable of pulling off challenging growth strategies against other large incumbents. Don’t bet against Sea.</p><p>In addition, the company has also ventured into other verticals such as food delivery to expand its ecosystem. Sea sees food delivery as a complementary offering in Shopee. In Vietnam, Sea-owned food delivery service Now which it acquired in 2017 is already themarket leader, having unseated the incumbent Grab. The company also recently launched its food delivery service in Jakarta, Indonesia, with plans to launch into other cities in the future.</p><p><b>The SeaMoney Synergies</b></p><p>Sea’s fintech platform SeaMoney continues to see continued success and growth as mobile wallet services TPV recorded a YoY growth of almost 209% to $3.4B, as ShopeePay continues to ride on the coattails of Shopee’s rapid growth. The company also highlighted that according to Snapcart Indonesia’s survey in March, “ShopeePay was the most used, the most remembered and most liked mobile wallet by Indonesian consumers during the first quarter.” (Source: SE Q1’21 earnings transcript)</p><p>The company is also aggressively expanding its off-platform use cases by establishing “partnerships with major consumer brands in Indonesia, one of which is their partnership with Indomaret, a leading Indonesian convenience store chain, as well as with Wendy’s(NASDAQ:WEN)and Domino’s Pizza(NYSE:DPZ).”</p><p>The company has also continued to improve the utility within ShopeePay adding new features such as “Deals Near Me”, which was said to have driven “significant footfall to its onboarded offline merchants.”</p><p>The strategy of incorporating the higher-margin digital financial services products such as wealth management products is also within the pipeline and is a natural extension of its fintech strategy. Although I believe this may be the most challenging aspect among its growth strategies within SeaMoney as financial services is a highly regulated market and the Southeast Asia region’s regulatory landscape largely differs between countries. Yet, it is still a key area of growth within the company’s overall fintech blueprint.</p><p><b>GoTo: What Should Investors Look Out For In The Tokopedia And Gojek Merger?</b></p><p>Much has been said recently regarding the SoftBank(OTCPK:SFTBY)and Alibaba-backedmergerbetween Tokopedia and Gojek and the risks it may pose to Sea’s leadership.</p><p>What’s important for investors to note is that in my opinion, the move seems born out of a measure of “desperation” to save their own businesses from the growing prowess of Grab (AGC) and SE in Gojek’s case and SE in Tokopedia’s case who have been aggressively taking away their respective market share, eventually culminating in them losing their respective market leadership. Therefore, it’s a marriage of two “losing” incumbents who have failed to stem the charge of their strong and well-managed new market entrants in Sea and Grab. Sea and Grab are themselves no strangers to dislodging market-leading incumbents, with Grab having sentUber Technologies(UBER) packing home from Southeast Asia and BABA-backed Lazada getting overtaken by Sea in the Southeast Asian market.</p><p>Grab’s food delivery business was reported to account for 53% of Indonesia’s food delivery market, while its ride-hailing business was reported to account for 64% of the Indonesian ride-hailing market in2019. Grab sees Indonesia as the crown jewel in its Southeast Asian portfolio, with Grab CEOAnthony Tanreportedly having spent a lot of time in Indonesia to oversee its growth strategies. With Grab projected to turnEBITDA profitable by 2023, I feel Gojek may have already crucially lost the initiative to Grab.</p><p>Tokopedia, which was founded in 2009 had a head start of close to 6 years over Shopee, a huge amount of time in Tech before Shopee commenced operations in 2015. In just a short span of 6 years, not only has Tokopedia lost its leadership position to Shopee, ShopeePay has also overtaken all the other e-payment players in Indonesia in a mere two years, as ShopeePay now holds a38% share, well ahead of Grab-backed OVO and Gojek’s GoPay, both holding 19% share each. Remember the Shopee and ShopeePay’s synergies, it’s like a flywheel, each driving increased usage of the other, and leading further to increased GMV and TPV respectively. Shopee also reportedly understands Indonesian consumers’ needs better, especially among the female consumers as compared to Tokopedia according to a report byMomentum Works:</p><blockquote>For Shopee, fashion and beauty are the most popular product categories. On the other hand, Tokopedia is more established in mobile and electronics. This explains why many of the female Indonesians are going to Shopee instead. For mobile and electronics, you probably only buy them once or twice a year. For fashion and beauty, it’s a different story. You can buy it every other month and even if you do not buy, you browse a lot – sending traffic to the platform. Impulse buying is also common for these categories, which is just nice for an ecosystem of shoppers, products as well as influencers.</blockquote><p>With Sea having already turned Adjusted EBITDA profitable in Q1’21, the company is well ready to take on the challenges of this merger between the two incumbents, who may have already crucially lost their opportunities to “turn back time”, even with a merger that is perhaps too little too late.</p><p><b>Valuations</b></p><p><img src=\"https://static.tigerbbs.com/9af1f1703d974dcc9562883dc04d1f13\" tg-width=\"1134\" tg-height=\"518\" referrerpolicy=\"no-referrer\"></p><p>Peers EV / Fwd Rev. Data Source: S&P Global Market Intelligence</p><p>With such huge potential growth coming from Sea’s markets, Sea obviously trades at a premium when compared to its e-commerce peers, if we simply base off their respective expected revenue growth.</p><p><img src=\"https://static.tigerbbs.com/3607c4899ac3e4b1beccce944f68a638\" tg-width=\"1280\" tg-height=\"728\" referrerpolicy=\"no-referrer\"></p><p>Peers’ EBITDA Margin Forecast & CapEx Forecast. Data Source: S&P Global Market Intelligence</p><p>However, when we peek into Sea’s superior future cash flow generating capability using its projected EBITDA margins, we can see that Sea is only just getting started.</p><p>Since the company is expected to produce predictable cash flows moving forward, I find it meaningful to conduct a DCF valuation framework to determine a range of fair values with the results presented below.</p><p>Based on the DCF framework, I find SE undervalued by about 26% at the midpoint of its fair value range, with respect to the stock price of $246.33 as at 21 May 21. Therefore, I find the price level highly attractive.</p><p><img src=\"https://static.tigerbbs.com/0e8d8cce67ca4c035e6314b345d5f05a\" tg-width=\"1280\" tg-height=\"277\" referrerpolicy=\"no-referrer\"></p><p>Range of Fair Values. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/84cb6fe959ae96e28a8f3a60146ec35f\" tg-width=\"1154\" tg-height=\"726\" referrerpolicy=\"no-referrer\"></p><p>WACC computation. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/8982fb5ac9e8bb059635b287f81fe221\" tg-width=\"1280\" tg-height=\"206\" referrerpolicy=\"no-referrer\"></p><p>Fwd Rev & Fwd EBITDA. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/4e1e7da44b94ab543e888920747044ca\" tg-width=\"1172\" tg-height=\"934\" referrerpolicy=\"no-referrer\"></p><p>Unlevered FCF & Enterprise Value. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/75f2f24a8f6afecdf6bf0644d9bf8423\" tg-width=\"1014\" tg-height=\"696\" referrerpolicy=\"no-referrer\"></p><p>Equity Value Bridge. Data Source: S&P Global Market Intelligence</p><p><b>Price Action and Technical Analysis</b></p><p><img src=\"https://static.tigerbbs.com/bab4482ce4bebbe89bc6636f5d39f10d\" tg-width=\"1280\" tg-height=\"798\" referrerpolicy=\"no-referrer\">Source: TradingView</p><p>SE has been on a meteoric rise since Mar 20, and as at the date of writing (21 May 21), the stock was down by about 13% from its all-time high in Feb 21. The price level between $275 and $285 looks to be an area of key resistance and bull traps previously set to lure in late buyers.</p><p>Key support is at $200, with the 50-period MA also serving as a key dynamic support area. I may continue to add more positions into this stock if the price level retraces nearer to $200 at the next retracement.</p><p>Otherwise, investors who wish to initiate or add more positions may find the current price attractive.</p><p>Further key support levels are currently at $179 and $155, areas that I would likely add very aggressively if the price was to retrace to those areas.</p><p><b>Conclusion</b></p><p>Sea is a very well-managed and ambitious integrated Internet company that looks to be at the next phase of its rapid growth and profitability. Investors may wish to take advantage of the current consolidation phase to gain entry or add positions to this potentially massive cash flow machine.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Sea Limited Is Ready To Fire On All Cylinders</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSea Limited Is Ready To Fire On All Cylinders\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-24 10:54 GMT+8 <a href=https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.Investors need to pay attention to its potential cash flow margins that ...</p>\n\n<a href=\"https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SE":"Sea Ltd"},"source_url":"https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1154364832","content_text":"SummarySea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.Investors need to pay attention to its potential cash flow margins that could far exceed even AMZN and MELI.At the current price, investors are getting a bargain even at the bear case of its fair value range with a DCF framework.Photo by Wachiwit/iStock Editorial via Getty ImagesInvestment ThesisSea Limited (SE) has fallen about 13% from its all-time high. The company has continued to dominate its markets and looks certain to further extend its leadership position and expand its verticals to take even more market share away from its competitors. Investors should take advantage of the consolidation to initiate or add positions to this potential massive cash flow generator.Earnings Review and What To Look Out For?Sea Limited is the largest integrated Internet company in South East Asia, with operations spanning across gaming, e-commerce, and fintech.The company’s recent Q1’21 results were another blockbuster across all business segments, demonstrating the company’s strong leadership and well-executed growth strategies towards itsvision:We think we stand in the best position to capitalize on the opportunity to build the largest consumer Internet ecosystem in the region. And we'll continue to focus on executing on our core businesses as well as building those ecosystems.As a reminder, for its e-commerce segment Shopee, Sea considers its region to comprise the following markets: Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore, of which Indonesia is the company’s largest market.For its gaming segmentGarena, the company’s largest and growing markets comprise Southeast Asia, Taiwan, Brazil, Mexico, India, North America, Russia, and the Middle East.SE’s Quarterly Results. Data Source: S&P Global Market IntelligenceQ1’21 YoY revenue growth accelerated to 146.7%. In fact, Q1’21 is the 11th consecutive quarter of >100% YoY revenue growth. The company’s main revenue driverGarena recorded a 111.4% YoY rise, while Shopee and other services recorded a 189.8% YoY increase.Gross margin also improved significantly compared to the prior year. Q1’21 gross margin came in at 36.6% as compared to 28.9% a year ago. In its respective segments, Garena’s gross margin also improved to 68.2% from 38.6% a year ago, while Shopee’s gross margin went up to 13.7% from 7.1% a year ago.SE’s LTM results. Data Source: S&P Global Market IntelligenceLooking across the longer-term trend using the LTM basis, we could also see similar fantastic top line performance. LTM YoY revenue growth came in at 113.7%, and gross margin also improved to 33% compared to 30.4% a year ago. Therefore, investors should be encouraged to know that Sea’s top line performance has been consistently getting better and better even as it scaled up fast, improving its cost of revenue ratio, showing just how capable the company is in being able to execute its growth strategies across multiple countries within its region.Investors may want to continue paying attention to the company’s sales and marketing spend as it still accounted for the majority of the operating expenses in both the Q and LTM results, respectively. More importantly, sales and marketing spend as a percentage of revenue has continued to fall as the company scaled up, reflecting improving cost efficiencies over time.SE’s OPEX as a % of Revenue (LTM Trend). Data Source: S&P Global Market IntelligenceThis has certainly helped to improve the company’s overall cost efficiencies over time, showing clearly the benefits of economies of scale of the company’s business model. LTM sales and marketing spend improved to 40.6% of revenue from 43.3% a year ago, while LTM overall operating expenses improved to 59.9% of revenue from 67.4% a year ago.This has helped to narrow the company’s LTM negative operating margin to -27% from -37%. Investors should be reminded not to focus on SE’s near-term operating margins as a gauge of the company’s core operating performance. This is because the company is still in the early stages (despite growing so rapidly) of penetrating Southeast Asia’s massive e-commerce market, of which it is the clear leader currently. The company is expected to continue investing heavily in sales and marketing, in order to drive the massive potential for growth in the region and to establish itself as the future undisputed e-commerce leader in the region taking the large majority of the pie, leaving the rest of its competitors to only be able to compete in their much smaller respective niche market segments, just like what Amazon (AMZN) had done in its established markets.In fact, Sea’s CEOForrest Li, who was named “Singapore Businessman of the Year at the 35th Singapore Business Awards in Nov 20” added:Let me put it this way, it (Shopee) can be profitable anytime. But I think what's really important to us is we think it's still very early days for e-commerce development. We are in a very good situation because Garena has been profitable - actually it's pretty profitable, and this gives us the resources to invest in Shopee, invest in SeaMoney. I think pretty soon, Shopee will turn to be profitable as well. In certain markets, like Taiwan, it's already profitable. And then we will have more resources; two cash flow generators: Garena and Shopee. This allows us to continually invest in future opportunities.I have previously discussed (articles listedhereandhere) how important it is for investors to focus on cash flows for companies with massive scalability potential like Coupang (CPNG) and Opendoor Technologies (OPEN) which are still in their early days of penetrating their respective markets.It is the same focus for Sea as we attempt to delve deeper into its cash flow generating ability. Sea uses Adjusted EBITDA to report its cash flow performance. I will present the discussion from FCF and EBITDA point of view first as a matter of consistency, before going over to the Adjusted EBITDA metrics.SE’s LTM CFO Margin and LTM FCF Margin. Data Source: S&P Global Market IntelligenceA quick glance over to its cash flow statement unveiled just how well-performing SE has been with its cash flow management. In fact, SE’s CFO and FCF performance has been improving remarkably over time as it scaled up quickly, and the company is just getting started. Its LTM CFO margins have been steadily improving over the previous year from -5.36% to 17.28% for the Q1’21 quarter. In addition, its LTM FCF margins also improved steadily over the previous year from -13.4% to 11.08%.SE’s EBITDA Margin & EBIT Margin. Data Source: S&P Global Market IntelligenceWhen we move over to its EBITDA margins, the improvement in trend of its core operating performance is also clearly discernible. Although it has yet to turn EBITDA positive, it was due mainly to necessary investments in sales and marketing.SE’s CapEx Margin & CFO Margin. Data Source: S&P Global Market IntelligenceSE has also benefited from the huge improvement in its core operating performance as seen in its CFO margin trend, while its heavy earlier CapEx investments have started to bear fruit as it scaled, as the CapEx margin is trending lower, and its CFO will now be able to sustain its CapEx moving forward.It’s very clear that SE’s business has well cleared its inflection point of heavy investments to scale up, and the company is well on its way to generate huge cash flows in the future as it continues to power ahead in its market penetration.SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market IntelligenceMoving ahead, we can also see that SE’s forward EBITDA margin trend is expected to significantly expand, while CapEx margin is expected to continue to fall. The company is on track to be a massive cash flow generator, with EBITDA margin expected to be about 43.8% by FY 30. Therefore, investors must be aligned with Sea’s long-term vision of focusing on growing its cash flows as it continues to penetrate the region’s markets. Based on its current growth trajectory, SE’s cash flow generating potential looks massive.AMZN’s & SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market IntelligenceWhen we bring in AMZN’s forecasts, I believe investors can clearly see what I mean. AMZN is already quite profitable based on its EBITDA margin, while SE’s EBITDA margin profitability is probably just getting started and SE is expected to grow its EBITDA margins much faster than AMZN, and this only goes to show the tremendous potential of the markets that SE is operating in. Investors are clearly reminded to give Shopee time to scale up to deliver the kind of cash flow profitability that will drive future returns.SE’s Adjusted EBITDA. Source: SE 6-KAs we move on to the segmented Adjusted EBITDA presented by the company, we can then infer what SE CEO Forrest Li meant by “Garena providing the resources for the company to invest in Shopee and SeaMoney.”The company is continuing to build on Garena’s success to deliver the resources needed to invest in Shopee and SeaMoney. Investors should consider Shopee and SeaMoney as an entity because they have tremendous synergies and are each other’s flywheel. Garena offers clear cash flow visibility for Shopee and SeaMoney to grow.Garena’s bookings reached $1.1B in Q1’21, which represents a 117.4% YoY increase. The bookings consist of current revenue and change in deferred revenue, the part which provides visibility into future revenue recognition.As can be seen, based on Adjusted EBITDA, which also included change in deferred revenue, SE has turned profitable. Unlike many other e-commerce companies or internet companies, SE already has a cash flow profitable Garena segment to provide the resources to drive its e-commerce and fintech segment growth. This combination is extremely powerful and, coupled with the company’s remarkable execution, has already brought FCF profitability to its operations, and soon EBITDA profitable. This will certainly allow SE to push even harder to drive more sustainable investments into more verticals and products to expand its ecosystem and further reduce the share of the pie available and pull itself further away from its closest competitors.Therefore, investors must continue to pay attention to the key growth drivers in Garena, and how the company intends to stretch its leadership further to protect its key cash flow generator until Shopee and SeaMoney become self-sustainable.Shopee’s Adjusted EBITDA per order. Source:TechinasiaAs Shopee continues to drive its fast expansion across the region, its unit economics have continued to improve remarkably, as it achieved operating efficiencies over time, leading to further reductions in Adjusted EBITDA loss per order. For Q1’21, the Adjusted EBITDA loss per order improved to $0.38, which represents a 38% YoY decline. As the company has guided earlier, it would not be long before Shopee achieves self-sustaining EBITDA profitability.What’s Next for Garena?At the Pocket Gamer Awards 2021, Garena received the Best Mobile Publisher Award, and Free Fire was also named the Best Battle Royale Game.Yet, according to the company, Garena’s most popular self-developedFree Fireisstill at an early stage of driving growth on the user base as well as pay user base for this game and developing it into a social platform where people not only come to play the core gameplay, but also enjoy other modes hangout, listen to music, social lives.”The company’s focus on Free Fire is notable as it is Garena’s most important revenue driver. Therefore the ability to scale Free Fire beyond just a game but into a social platform would bring Free Fire into its next phase of growth while continuing to grow its active user base and paying users. Sea also emphasized that the company continues to see “stickiness” in its active user metrics as the average active user spends about 2 to 3 hours daily on its platform. Not only has Garena grown its quarterly paying users 123.5% YoY, its quarterly paying users also represented 12.3% of quarterly active users (QAU) for Q1’21 as compared to 8.9% a year ago. Therefore driving the stickiness of the platform and encouraging more time spent among its active users would help to drive its paying user ratio up.Sea believes that one of the key factors that could help to drive Garena towards its vision of a social platform is dramatically increasing its modes of engagement with its users. This is not just restricted to online activities, but also offline community engagement programs. The whole intent is to develop a “broad-based platform stickiness” beyond its top active users, by building and growing the platform into a much larger community and provide the users ample opportunities to socialize and engage through its ongoing content development, and its promotion of community engagement.A key aspect of its community engagement strategies is focused on eSports. Sea believes that it operates the “largest mobile-game professional league in Southeast Asia, Taiwan and Brazil” and Free Fire was also named the “eSports Mobile Game of the Year at the eSports Awards 2020”. (Source: SE 20-F). The company continues to hold very large-scale eSports tournaments and events to strengthen its community engagement strategies such as Free Fire League Latinoamerica 2021, and its flagship Garena World event in April. On the 28th May, theFree Fire World Series 2021 Singapore(FFWS 2021 SG), which is Free Fire’s most prestigious eSports tournament, will take place in Singapore with a massive prize pool of US2M. Sea is showing no signs of ever letting the company’s most important revenue driver and most profitable segment to slip through its grip. Instead, it continues to build on its success as the leading eSports organizer in its markets.Garena is also looking way beyond the success of Free Fire and is constantly developing its games portfolio pipeline through constant R&D and product development with its “significant number of our more than 1,000 in-house game developers globally are constantly working on new ideas, while we continue to engage with third-party game studios for collaboration on promising and complementary game development and publishing opportunities.” (Source: SE Q1’21 earnings transcript)Expanding Shopee’s Global Footprint and VerticalsSea is actively expanding its presence in LatAm’s largest e-commerce market:Brazil, taking on MercadoLibre (MELI) in its most important market and with eyes on the whole LatAm. Although Sea is a relatively new player in e-commerce, having set up Shopee only in2015, the company is no stranger to taking on big incumbents. Shopee has already unseated the incumbent Alibaba-backed (BABA)Lazadaas the number one e-commerce platform in Southeast Asia. In addition, in its most important market, Indonesia, the company has also unseated incumbent Tokopedia as the leader, and Shopee was also recently reported to be themost visited e-commerce websiteamong Indonesian consumers in 2020.Sea further highlighted that the company continued to rank first in MAU and total time spent on apps in the shopping category across its markets in Southeast Asia, and in Indonesia it also recorded its fastest quarterly YoY growth rates on record. (Source: SE Q1’21 earnings transcript)Therefore, Sea is an extremely well-managed company, capable of pulling off challenging growth strategies against other large incumbents. Don’t bet against Sea.In addition, the company has also ventured into other verticals such as food delivery to expand its ecosystem. Sea sees food delivery as a complementary offering in Shopee. In Vietnam, Sea-owned food delivery service Now which it acquired in 2017 is already themarket leader, having unseated the incumbent Grab. The company also recently launched its food delivery service in Jakarta, Indonesia, with plans to launch into other cities in the future.The SeaMoney SynergiesSea’s fintech platform SeaMoney continues to see continued success and growth as mobile wallet services TPV recorded a YoY growth of almost 209% to $3.4B, as ShopeePay continues to ride on the coattails of Shopee’s rapid growth. The company also highlighted that according to Snapcart Indonesia’s survey in March, “ShopeePay was the most used, the most remembered and most liked mobile wallet by Indonesian consumers during the first quarter.” (Source: SE Q1’21 earnings transcript)The company is also aggressively expanding its off-platform use cases by establishing “partnerships with major consumer brands in Indonesia, one of which is their partnership with Indomaret, a leading Indonesian convenience store chain, as well as with Wendy’s(NASDAQ:WEN)and Domino’s Pizza(NYSE:DPZ).”The company has also continued to improve the utility within ShopeePay adding new features such as “Deals Near Me”, which was said to have driven “significant footfall to its onboarded offline merchants.”The strategy of incorporating the higher-margin digital financial services products such as wealth management products is also within the pipeline and is a natural extension of its fintech strategy. Although I believe this may be the most challenging aspect among its growth strategies within SeaMoney as financial services is a highly regulated market and the Southeast Asia region’s regulatory landscape largely differs between countries. Yet, it is still a key area of growth within the company’s overall fintech blueprint.GoTo: What Should Investors Look Out For In The Tokopedia And Gojek Merger?Much has been said recently regarding the SoftBank(OTCPK:SFTBY)and Alibaba-backedmergerbetween Tokopedia and Gojek and the risks it may pose to Sea’s leadership.What’s important for investors to note is that in my opinion, the move seems born out of a measure of “desperation” to save their own businesses from the growing prowess of Grab (AGC) and SE in Gojek’s case and SE in Tokopedia’s case who have been aggressively taking away their respective market share, eventually culminating in them losing their respective market leadership. Therefore, it’s a marriage of two “losing” incumbents who have failed to stem the charge of their strong and well-managed new market entrants in Sea and Grab. Sea and Grab are themselves no strangers to dislodging market-leading incumbents, with Grab having sentUber Technologies(UBER) packing home from Southeast Asia and BABA-backed Lazada getting overtaken by Sea in the Southeast Asian market.Grab’s food delivery business was reported to account for 53% of Indonesia’s food delivery market, while its ride-hailing business was reported to account for 64% of the Indonesian ride-hailing market in2019. Grab sees Indonesia as the crown jewel in its Southeast Asian portfolio, with Grab CEOAnthony Tanreportedly having spent a lot of time in Indonesia to oversee its growth strategies. With Grab projected to turnEBITDA profitable by 2023, I feel Gojek may have already crucially lost the initiative to Grab.Tokopedia, which was founded in 2009 had a head start of close to 6 years over Shopee, a huge amount of time in Tech before Shopee commenced operations in 2015. In just a short span of 6 years, not only has Tokopedia lost its leadership position to Shopee, ShopeePay has also overtaken all the other e-payment players in Indonesia in a mere two years, as ShopeePay now holds a38% share, well ahead of Grab-backed OVO and Gojek’s GoPay, both holding 19% share each. Remember the Shopee and ShopeePay’s synergies, it’s like a flywheel, each driving increased usage of the other, and leading further to increased GMV and TPV respectively. Shopee also reportedly understands Indonesian consumers’ needs better, especially among the female consumers as compared to Tokopedia according to a report byMomentum Works:For Shopee, fashion and beauty are the most popular product categories. On the other hand, Tokopedia is more established in mobile and electronics. This explains why many of the female Indonesians are going to Shopee instead. For mobile and electronics, you probably only buy them once or twice a year. For fashion and beauty, it’s a different story. You can buy it every other month and even if you do not buy, you browse a lot – sending traffic to the platform. Impulse buying is also common for these categories, which is just nice for an ecosystem of shoppers, products as well as influencers.With Sea having already turned Adjusted EBITDA profitable in Q1’21, the company is well ready to take on the challenges of this merger between the two incumbents, who may have already crucially lost their opportunities to “turn back time”, even with a merger that is perhaps too little too late.ValuationsPeers EV / Fwd Rev. Data Source: S&P Global Market IntelligenceWith such huge potential growth coming from Sea’s markets, Sea obviously trades at a premium when compared to its e-commerce peers, if we simply base off their respective expected revenue growth.Peers’ EBITDA Margin Forecast & CapEx Forecast. Data Source: S&P Global Market IntelligenceHowever, when we peek into Sea’s superior future cash flow generating capability using its projected EBITDA margins, we can see that Sea is only just getting started.Since the company is expected to produce predictable cash flows moving forward, I find it meaningful to conduct a DCF valuation framework to determine a range of fair values with the results presented below.Based on the DCF framework, I find SE undervalued by about 26% at the midpoint of its fair value range, with respect to the stock price of $246.33 as at 21 May 21. Therefore, I find the price level highly attractive.Range of Fair Values. Data Source: S&P Global Market IntelligenceWACC computation. Data Source: S&P Global Market IntelligenceFwd Rev & Fwd EBITDA. Data Source: S&P Global Market IntelligenceUnlevered FCF & Enterprise Value. Data Source: S&P Global Market IntelligenceEquity Value Bridge. Data Source: S&P Global Market IntelligencePrice Action and Technical AnalysisSource: TradingViewSE has been on a meteoric rise since Mar 20, and as at the date of writing (21 May 21), the stock was down by about 13% from its all-time high in Feb 21. The price level between $275 and $285 looks to be an area of key resistance and bull traps previously set to lure in late buyers.Key support is at $200, with the 50-period MA also serving as a key dynamic support area. I may continue to add more positions into this stock if the price level retraces nearer to $200 at the next retracement.Otherwise, investors who wish to initiate or add more positions may find the current price attractive.Further key support levels are currently at $179 and $155, areas that I would likely add very aggressively if the price was to retrace to those areas.ConclusionSea is a very well-managed and ambitious integrated Internet company that looks to be at the next phase of its rapid growth and profitability. Investors may wish to take advantage of the current consolidation phase to gain entry or add positions to this potentially massive cash flow machine.","news_type":1},"isVote":1,"tweetType":1,"viewCount":376,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":131516816,"gmtCreate":1621867078035,"gmtModify":1704363589288,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"Monitoring ","listText":"Monitoring ","text":"Monitoring","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/131516816","repostId":"1154364832","repostType":2,"repost":{"id":"1154364832","pubTimestamp":1621824866,"share":"https://ttm.financial/m/news/1154364832?lang=&edition=fundamental","pubTime":"2021-05-24 10:54","market":"us","language":"en","title":"Sea Limited Is Ready To Fire On All Cylinders","url":"https://stock-news.laohu8.com/highlight/detail?id=1154364832","media":"seekingalpha","summary":"SummarySea Limited continues to extend its leadership across all its business segments with a blockb","content":"<p>Summary</p><ul><li>Sea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.</li><li>Investors need to pay attention to its potential cash flow margins that could far exceed even AMZN and MELI.</li><li>At the current price, investors are getting a bargain even at the bear case of its fair value range with a DCF framework.</li></ul><p><img src=\"https://static.tigerbbs.com/04fbbc1a372c45d5d8e903015e5b0dfe\" tg-width=\"768\" tg-height=\"512\" referrerpolicy=\"no-referrer\">Photo by Wachiwit/iStock Editorial via Getty ImagesInvestment Thesis</p><p>Sea Limited (SE) has fallen about 13% from its all-time high. The company has continued to dominate its markets and looks certain to further extend its leadership position and expand its verticals to take even more market share away from its competitors. Investors should take advantage of the consolidation to initiate or add positions to this potential massive cash flow generator.</p><p><b>Earnings Review and What To Look Out For?</b></p><p>Sea Limited is the largest integrated Internet company in South East Asia, with operations spanning across gaming, e-commerce, and fintech.</p><p>The company’s recent Q1’21 results were another blockbuster across all business segments, demonstrating the company’s strong leadership and well-executed growth strategies towards itsvision:</p><blockquote>We think we stand in the best position to capitalize on the opportunity to build the largest consumer Internet ecosystem in the region. And we'll continue to focus on executing on our core businesses as well as building those ecosystems.</blockquote><p>As a reminder, for its e-commerce segment Shopee, Sea considers its region to comprise the following markets: Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore, of which Indonesia is the company’s largest market.</p><p>For its gaming segmentGarena, the company’s largest and growing markets comprise Southeast Asia, Taiwan, Brazil, Mexico, India, North America, Russia, and the Middle East.</p><p><img src=\"https://static.tigerbbs.com/932ec3694e935afbfa643e9c904ce964\" tg-width=\"1280\" tg-height=\"636\" referrerpolicy=\"no-referrer\">SE’s Quarterly Results. Data Source: S&P Global Market Intelligence</p><p>Q1’21 YoY revenue growth accelerated to 146.7%. In fact, Q1’21 is the 11th consecutive quarter of >100% YoY revenue growth. The company’s main revenue driverGarena recorded a 111.4% YoY rise, while Shopee and other services recorded a 189.8% YoY increase.</p><p>Gross margin also improved significantly compared to the prior year. Q1’21 gross margin came in at 36.6% as compared to 28.9% a year ago. In its respective segments, Garena’s gross margin also improved to 68.2% from 38.6% a year ago, while Shopee’s gross margin went up to 13.7% from 7.1% a year ago.</p><p><img src=\"https://static.tigerbbs.com/6d9651b44ee4d09b2dcf3d8c49e72213\" tg-width=\"1280\" tg-height=\"629\" referrerpolicy=\"no-referrer\"></p><p>SE’s LTM results. Data Source: S&P Global Market Intelligence</p><p>Looking across the longer-term trend using the LTM basis, we could also see similar fantastic top line performance. LTM YoY revenue growth came in at 113.7%, and gross margin also improved to 33% compared to 30.4% a year ago. Therefore, investors should be encouraged to know that Sea’s top line performance has been consistently getting better and better even as it scaled up fast, improving its cost of revenue ratio, showing just how capable the company is in being able to execute its growth strategies across multiple countries within its region.</p><p>Investors may want to continue paying attention to the company’s sales and marketing spend as it still accounted for the majority of the operating expenses in both the Q and LTM results, respectively. More importantly, sales and marketing spend as a percentage of revenue has continued to fall as the company scaled up, reflecting improving cost efficiencies over time.</p><p><img src=\"https://static.tigerbbs.com/695523a022549fe176d5ac4f89f3c4cb\" tg-width=\"1004\" tg-height=\"558\" referrerpolicy=\"no-referrer\"></p><p>SE’s OPEX as a % of Revenue (LTM Trend). Data Source: S&P Global Market Intelligence</p><p>This has certainly helped to improve the company’s overall cost efficiencies over time, showing clearly the benefits of economies of scale of the company’s business model. LTM sales and marketing spend improved to 40.6% of revenue from 43.3% a year ago, while LTM overall operating expenses improved to 59.9% of revenue from 67.4% a year ago.</p><p>This has helped to narrow the company’s LTM negative operating margin to -27% from -37%. Investors should be reminded not to focus on SE’s near-term operating margins as a gauge of the company’s core operating performance. This is because the company is still in the early stages (despite growing so rapidly) of penetrating Southeast Asia’s massive e-commerce market, of which it is the clear leader currently. The company is expected to continue investing heavily in sales and marketing, in order to drive the massive potential for growth in the region and to establish itself as the future undisputed e-commerce leader in the region taking the large majority of the pie, leaving the rest of its competitors to only be able to compete in their much smaller respective niche market segments, just like what Amazon (AMZN) had done in its established markets.</p><p>In fact, Sea’s CEOForrest Li, who was named “Singapore Businessman of the Year at the 35th Singapore Business Awards in Nov 20” added:</p><blockquote>Let me put it this way, it (Shopee) can be profitable anytime. But I think what's really important to us is we think it's still very early days for e-commerce development. We are in a very good situation because Garena has been profitable - actually it's pretty profitable, and this gives us the resources to invest in Shopee, invest in SeaMoney. I think pretty soon, Shopee will turn to be profitable as well. In certain markets, like Taiwan, it's already profitable. And then we will have more resources; two cash flow generators: Garena and Shopee. This allows us to continually invest in future opportunities.</blockquote><p>I have previously discussed (articles listedhereandhere) how important it is for investors to focus on cash flows for companies with massive scalability potential like Coupang (CPNG) and Opendoor Technologies (OPEN) which are still in their early days of penetrating their respective markets.</p><p>It is the same focus for Sea as we attempt to delve deeper into its cash flow generating ability. Sea uses Adjusted EBITDA to report its cash flow performance. I will present the discussion from FCF and EBITDA point of view first as a matter of consistency, before going over to the Adjusted EBITDA metrics.</p><p><img src=\"https://static.tigerbbs.com/ae1db2d81fcf921eaba649f93cbbf9e0\" tg-width=\"1280\" tg-height=\"601\" referrerpolicy=\"no-referrer\"></p><p>SE’s LTM CFO Margin and LTM FCF Margin. Data Source: S&P Global Market Intelligence</p><p>A quick glance over to its cash flow statement unveiled just how well-performing SE has been with its cash flow management. In fact, SE’s CFO and FCF performance has been improving remarkably over time as it scaled up quickly, and the company is just getting started. Its LTM CFO margins have been steadily improving over the previous year from -5.36% to 17.28% for the Q1’21 quarter. In addition, its LTM FCF margins also improved steadily over the previous year from -13.4% to 11.08%.</p><p><img src=\"https://static.tigerbbs.com/2c3f20175798dec1212a5aac70feb8cc\" tg-width=\"1280\" tg-height=\"826\" referrerpolicy=\"no-referrer\"></p><p>SE’s EBITDA Margin & EBIT Margin. Data Source: S&P Global Market Intelligence</p><p>When we move over to its EBITDA margins, the improvement in trend of its core operating performance is also clearly discernible. Although it has yet to turn EBITDA positive, it was due mainly to necessary investments in sales and marketing.</p><p><img src=\"https://static.tigerbbs.com/5b82c3c4bf6f1a5698e05c68eaddbe2e\" tg-width=\"1280\" tg-height=\"819\" referrerpolicy=\"no-referrer\"></p><p><b>SE’s CapEx Margin & CFO Margin. Data Source: S&P Global Market Intelligence</b></p><p>SE has also benefited from the huge improvement in its core operating performance as seen in its CFO margin trend, while its heavy earlier CapEx investments have started to bear fruit as it scaled, as the CapEx margin is trending lower, and its CFO will now be able to sustain its CapEx moving forward.</p><p>It’s very clear that SE’s business has well cleared its inflection point of heavy investments to scale up, and the company is well on its way to generate huge cash flows in the future as it continues to power ahead in its market penetration.</p><p><img src=\"https://static.tigerbbs.com/88fb528aaddb4c6a12d219ac9c2e9f64\" tg-width=\"1280\" tg-height=\"730\" referrerpolicy=\"no-referrer\"></p><p>SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market Intelligence</p><p>Moving ahead, we can also see that SE’s forward EBITDA margin trend is expected to significantly expand, while CapEx margin is expected to continue to fall. The company is on track to be a massive cash flow generator, with EBITDA margin expected to be about 43.8% by FY 30. Therefore, investors must be aligned with Sea’s long-term vision of focusing on growing its cash flows as it continues to penetrate the region’s markets. Based on its current growth trajectory, SE’s cash flow generating potential looks massive.</p><p><img src=\"https://static.tigerbbs.com/46dd783ffd94d877ef749555e8869764\" tg-width=\"1280\" tg-height=\"735\" referrerpolicy=\"no-referrer\"></p><p>AMZN’s & SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market Intelligence</p><p>When we bring in AMZN’s forecasts, I believe investors can clearly see what I mean. AMZN is already quite profitable based on its EBITDA margin, while SE’s EBITDA margin profitability is probably just getting started and SE is expected to grow its EBITDA margins much faster than AMZN, and this only goes to show the tremendous potential of the markets that SE is operating in. Investors are clearly reminded to give Shopee time to scale up to deliver the kind of cash flow profitability that will drive future returns.</p><p><img src=\"https://static.tigerbbs.com/37f1f59f3a8d0e8ef6e74b521330d9f7\" tg-width=\"1280\" tg-height=\"714\" referrerpolicy=\"no-referrer\">SE’s Adjusted EBITDA. Source: SE 6-K</p><p>As we move on to the segmented Adjusted EBITDA presented by the company, we can then infer what SE CEO Forrest Li meant by “Garena providing the resources for the company to invest in Shopee and SeaMoney.”</p><p>The company is continuing to build on Garena’s success to deliver the resources needed to invest in Shopee and SeaMoney. Investors should consider Shopee and SeaMoney as an entity because they have tremendous synergies and are each other’s flywheel. Garena offers clear cash flow visibility for Shopee and SeaMoney to grow.</p><p>Garena’s bookings reached $1.1B in Q1’21, which represents a 117.4% YoY increase. The bookings consist of current revenue and change in deferred revenue, the part which provides visibility into future revenue recognition.</p><p>As can be seen, based on Adjusted EBITDA, which also included change in deferred revenue, SE has turned profitable. Unlike many other e-commerce companies or internet companies, SE already has a cash flow profitable Garena segment to provide the resources to drive its e-commerce and fintech segment growth. This combination is extremely powerful and, coupled with the company’s remarkable execution, has already brought FCF profitability to its operations, and soon EBITDA profitable. This will certainly allow SE to push even harder to drive more sustainable investments into more verticals and products to expand its ecosystem and further reduce the share of the pie available and pull itself further away from its closest competitors.</p><p>Therefore, investors must continue to pay attention to the key growth drivers in Garena, and how the company intends to stretch its leadership further to protect its key cash flow generator until Shopee and SeaMoney become self-sustainable.</p><p><img src=\"https://static.tigerbbs.com/3291643e2334f5cf171810ba13d16ca2\" tg-width=\"1100\" tg-height=\"604\" referrerpolicy=\"no-referrer\"></p><p>Shopee’s Adjusted EBITDA per order. Source:Techinasia</p><p>As Shopee continues to drive its fast expansion across the region, its unit economics have continued to improve remarkably, as it achieved operating efficiencies over time, leading to further reductions in Adjusted EBITDA loss per order. For Q1’21, the Adjusted EBITDA loss per order improved to $0.38, which represents a 38% YoY decline. As the company has guided earlier, it would not be long before Shopee achieves self-sustaining EBITDA profitability.</p><p><b>What’s Next for Garena?</b></p><p>At the Pocket Gamer Awards 2021, Garena received the Best Mobile Publisher Award, and Free Fire was also named the Best Battle Royale Game.</p><p>Yet, according to the company, Garena’s most popular self-developedFree Fireis</p><blockquote>still at an early stage of driving growth on the user base as well as pay user base for this game and developing it into a social platform where people not only come to play the core gameplay, but also enjoy other modes hangout, listen to music, social lives.”</blockquote><p>The company’s focus on Free Fire is notable as it is Garena’s most important revenue driver. Therefore the ability to scale Free Fire beyond just a game but into a social platform would bring Free Fire into its next phase of growth while continuing to grow its active user base and paying users. Sea also emphasized that the company continues to see “stickiness” in its active user metrics as the average active user spends about 2 to 3 hours daily on its platform. Not only has Garena grown its quarterly paying users 123.5% YoY, its quarterly paying users also represented 12.3% of quarterly active users (QAU) for Q1’21 as compared to 8.9% a year ago. Therefore driving the stickiness of the platform and encouraging more time spent among its active users would help to drive its paying user ratio up.</p><p>Sea believes that one of the key factors that could help to drive Garena towards its vision of a social platform is dramatically increasing its modes of engagement with its users. This is not just restricted to online activities, but also offline community engagement programs. The whole intent is to develop a “broad-based platform stickiness” beyond its top active users, by building and growing the platform into a much larger community and provide the users ample opportunities to socialize and engage through its ongoing content development, and its promotion of community engagement.</p><p>A key aspect of its community engagement strategies is focused on eSports. Sea believes that it operates the “largest mobile-game professional league in Southeast Asia, Taiwan and Brazil” and Free Fire was also named the “eSports Mobile Game of the Year at the eSports Awards 2020”. (Source: SE 20-F). The company continues to hold very large-scale eSports tournaments and events to strengthen its community engagement strategies such as Free Fire League Latinoamerica 2021, and its flagship Garena World event in April. On the 28th May, theFree Fire World Series 2021 Singapore(FFWS 2021 SG), which is Free Fire’s most prestigious eSports tournament, will take place in Singapore with a massive prize pool of US2M. Sea is showing no signs of ever letting the company’s most important revenue driver and most profitable segment to slip through its grip. Instead, it continues to build on its success as the leading eSports organizer in its markets.</p><p>Garena is also looking way beyond the success of Free Fire and is constantly developing its games portfolio pipeline through constant R&D and product development with its “significant number of our more than 1,000 in-house game developers globally are constantly working on new ideas, while we continue to engage with third-party game studios for collaboration on promising and complementary game development and publishing opportunities.” (Source: SE Q1’21 earnings transcript)</p><p><b>Expanding Shopee’s Global Footprint and Verticals</b></p><p>Sea is actively expanding its presence in LatAm’s largest e-commerce market:Brazil, taking on MercadoLibre (MELI) in its most important market and with eyes on the whole LatAm. Although Sea is a relatively new player in e-commerce, having set up Shopee only in2015, the company is no stranger to taking on big incumbents. Shopee has already unseated the incumbent Alibaba-backed (BABA)Lazadaas the number one e-commerce platform in Southeast Asia. In addition, in its most important market, Indonesia, the company has also unseated incumbent Tokopedia as the leader, and Shopee was also recently reported to be themost visited e-commerce websiteamong Indonesian consumers in 2020.</p><p>Sea further highlighted that the company continued to rank first in MAU and total time spent on apps in the shopping category across its markets in Southeast Asia, and in Indonesia it also recorded its fastest quarterly YoY growth rates on record. (Source: SE Q1’21 earnings transcript)</p><p>Therefore, Sea is an extremely well-managed company, capable of pulling off challenging growth strategies against other large incumbents. Don’t bet against Sea.</p><p>In addition, the company has also ventured into other verticals such as food delivery to expand its ecosystem. Sea sees food delivery as a complementary offering in Shopee. In Vietnam, Sea-owned food delivery service Now which it acquired in 2017 is already themarket leader, having unseated the incumbent Grab. The company also recently launched its food delivery service in Jakarta, Indonesia, with plans to launch into other cities in the future.</p><p><b>The SeaMoney Synergies</b></p><p>Sea’s fintech platform SeaMoney continues to see continued success and growth as mobile wallet services TPV recorded a YoY growth of almost 209% to $3.4B, as ShopeePay continues to ride on the coattails of Shopee’s rapid growth. The company also highlighted that according to Snapcart Indonesia’s survey in March, “ShopeePay was the most used, the most remembered and most liked mobile wallet by Indonesian consumers during the first quarter.” (Source: SE Q1’21 earnings transcript)</p><p>The company is also aggressively expanding its off-platform use cases by establishing “partnerships with major consumer brands in Indonesia, one of which is their partnership with Indomaret, a leading Indonesian convenience store chain, as well as with Wendy’s(NASDAQ:WEN)and Domino’s Pizza(NYSE:DPZ).”</p><p>The company has also continued to improve the utility within ShopeePay adding new features such as “Deals Near Me”, which was said to have driven “significant footfall to its onboarded offline merchants.”</p><p>The strategy of incorporating the higher-margin digital financial services products such as wealth management products is also within the pipeline and is a natural extension of its fintech strategy. Although I believe this may be the most challenging aspect among its growth strategies within SeaMoney as financial services is a highly regulated market and the Southeast Asia region’s regulatory landscape largely differs between countries. Yet, it is still a key area of growth within the company’s overall fintech blueprint.</p><p><b>GoTo: What Should Investors Look Out For In The Tokopedia And Gojek Merger?</b></p><p>Much has been said recently regarding the SoftBank(OTCPK:SFTBY)and Alibaba-backedmergerbetween Tokopedia and Gojek and the risks it may pose to Sea’s leadership.</p><p>What’s important for investors to note is that in my opinion, the move seems born out of a measure of “desperation” to save their own businesses from the growing prowess of Grab (AGC) and SE in Gojek’s case and SE in Tokopedia’s case who have been aggressively taking away their respective market share, eventually culminating in them losing their respective market leadership. Therefore, it’s a marriage of two “losing” incumbents who have failed to stem the charge of their strong and well-managed new market entrants in Sea and Grab. Sea and Grab are themselves no strangers to dislodging market-leading incumbents, with Grab having sentUber Technologies(UBER) packing home from Southeast Asia and BABA-backed Lazada getting overtaken by Sea in the Southeast Asian market.</p><p>Grab’s food delivery business was reported to account for 53% of Indonesia’s food delivery market, while its ride-hailing business was reported to account for 64% of the Indonesian ride-hailing market in2019. Grab sees Indonesia as the crown jewel in its Southeast Asian portfolio, with Grab CEOAnthony Tanreportedly having spent a lot of time in Indonesia to oversee its growth strategies. With Grab projected to turnEBITDA profitable by 2023, I feel Gojek may have already crucially lost the initiative to Grab.</p><p>Tokopedia, which was founded in 2009 had a head start of close to 6 years over Shopee, a huge amount of time in Tech before Shopee commenced operations in 2015. In just a short span of 6 years, not only has Tokopedia lost its leadership position to Shopee, ShopeePay has also overtaken all the other e-payment players in Indonesia in a mere two years, as ShopeePay now holds a38% share, well ahead of Grab-backed OVO and Gojek’s GoPay, both holding 19% share each. Remember the Shopee and ShopeePay’s synergies, it’s like a flywheel, each driving increased usage of the other, and leading further to increased GMV and TPV respectively. Shopee also reportedly understands Indonesian consumers’ needs better, especially among the female consumers as compared to Tokopedia according to a report byMomentum Works:</p><blockquote>For Shopee, fashion and beauty are the most popular product categories. On the other hand, Tokopedia is more established in mobile and electronics. This explains why many of the female Indonesians are going to Shopee instead. For mobile and electronics, you probably only buy them once or twice a year. For fashion and beauty, it’s a different story. You can buy it every other month and even if you do not buy, you browse a lot – sending traffic to the platform. Impulse buying is also common for these categories, which is just nice for an ecosystem of shoppers, products as well as influencers.</blockquote><p>With Sea having already turned Adjusted EBITDA profitable in Q1’21, the company is well ready to take on the challenges of this merger between the two incumbents, who may have already crucially lost their opportunities to “turn back time”, even with a merger that is perhaps too little too late.</p><p><b>Valuations</b></p><p><img src=\"https://static.tigerbbs.com/9af1f1703d974dcc9562883dc04d1f13\" tg-width=\"1134\" tg-height=\"518\" referrerpolicy=\"no-referrer\"></p><p>Peers EV / Fwd Rev. Data Source: S&P Global Market Intelligence</p><p>With such huge potential growth coming from Sea’s markets, Sea obviously trades at a premium when compared to its e-commerce peers, if we simply base off their respective expected revenue growth.</p><p><img src=\"https://static.tigerbbs.com/3607c4899ac3e4b1beccce944f68a638\" tg-width=\"1280\" tg-height=\"728\" referrerpolicy=\"no-referrer\"></p><p>Peers’ EBITDA Margin Forecast & CapEx Forecast. Data Source: S&P Global Market Intelligence</p><p>However, when we peek into Sea’s superior future cash flow generating capability using its projected EBITDA margins, we can see that Sea is only just getting started.</p><p>Since the company is expected to produce predictable cash flows moving forward, I find it meaningful to conduct a DCF valuation framework to determine a range of fair values with the results presented below.</p><p>Based on the DCF framework, I find SE undervalued by about 26% at the midpoint of its fair value range, with respect to the stock price of $246.33 as at 21 May 21. Therefore, I find the price level highly attractive.</p><p><img src=\"https://static.tigerbbs.com/0e8d8cce67ca4c035e6314b345d5f05a\" tg-width=\"1280\" tg-height=\"277\" referrerpolicy=\"no-referrer\"></p><p>Range of Fair Values. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/84cb6fe959ae96e28a8f3a60146ec35f\" tg-width=\"1154\" tg-height=\"726\" referrerpolicy=\"no-referrer\"></p><p>WACC computation. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/8982fb5ac9e8bb059635b287f81fe221\" tg-width=\"1280\" tg-height=\"206\" referrerpolicy=\"no-referrer\"></p><p>Fwd Rev & Fwd EBITDA. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/4e1e7da44b94ab543e888920747044ca\" tg-width=\"1172\" tg-height=\"934\" referrerpolicy=\"no-referrer\"></p><p>Unlevered FCF & Enterprise Value. Data Source: S&P Global Market Intelligence</p><p><img src=\"https://static.tigerbbs.com/75f2f24a8f6afecdf6bf0644d9bf8423\" tg-width=\"1014\" tg-height=\"696\" referrerpolicy=\"no-referrer\"></p><p>Equity Value Bridge. Data Source: S&P Global Market Intelligence</p><p><b>Price Action and Technical Analysis</b></p><p><img src=\"https://static.tigerbbs.com/bab4482ce4bebbe89bc6636f5d39f10d\" tg-width=\"1280\" tg-height=\"798\" referrerpolicy=\"no-referrer\">Source: TradingView</p><p>SE has been on a meteoric rise since Mar 20, and as at the date of writing (21 May 21), the stock was down by about 13% from its all-time high in Feb 21. The price level between $275 and $285 looks to be an area of key resistance and bull traps previously set to lure in late buyers.</p><p>Key support is at $200, with the 50-period MA also serving as a key dynamic support area. I may continue to add more positions into this stock if the price level retraces nearer to $200 at the next retracement.</p><p>Otherwise, investors who wish to initiate or add more positions may find the current price attractive.</p><p>Further key support levels are currently at $179 and $155, areas that I would likely add very aggressively if the price was to retrace to those areas.</p><p><b>Conclusion</b></p><p>Sea is a very well-managed and ambitious integrated Internet company that looks to be at the next phase of its rapid growth and profitability. Investors may wish to take advantage of the current consolidation phase to gain entry or add positions to this potentially massive cash flow machine.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Sea Limited Is Ready To Fire On All Cylinders</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSea Limited Is Ready To Fire On All Cylinders\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-24 10:54 GMT+8 <a href=https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummarySea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.Investors need to pay attention to its potential cash flow margins that ...</p>\n\n<a href=\"https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SE":"Sea Ltd"},"source_url":"https://seekingalpha.com/article/4430755-sea-limited-stock-se-ready-to-fire-on-all-cylinders","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1154364832","content_text":"SummarySea Limited continues to extend its leadership across all its business segments with a blockbuster Q1’21 performance.Investors need to pay attention to its potential cash flow margins that could far exceed even AMZN and MELI.At the current price, investors are getting a bargain even at the bear case of its fair value range with a DCF framework.Photo by Wachiwit/iStock Editorial via Getty ImagesInvestment ThesisSea Limited (SE) has fallen about 13% from its all-time high. The company has continued to dominate its markets and looks certain to further extend its leadership position and expand its verticals to take even more market share away from its competitors. Investors should take advantage of the consolidation to initiate or add positions to this potential massive cash flow generator.Earnings Review and What To Look Out For?Sea Limited is the largest integrated Internet company in South East Asia, with operations spanning across gaming, e-commerce, and fintech.The company’s recent Q1’21 results were another blockbuster across all business segments, demonstrating the company’s strong leadership and well-executed growth strategies towards itsvision:We think we stand in the best position to capitalize on the opportunity to build the largest consumer Internet ecosystem in the region. And we'll continue to focus on executing on our core businesses as well as building those ecosystems.As a reminder, for its e-commerce segment Shopee, Sea considers its region to comprise the following markets: Indonesia, Taiwan, Vietnam, Thailand, the Philippines, Malaysia, and Singapore, of which Indonesia is the company’s largest market.For its gaming segmentGarena, the company’s largest and growing markets comprise Southeast Asia, Taiwan, Brazil, Mexico, India, North America, Russia, and the Middle East.SE’s Quarterly Results. Data Source: S&P Global Market IntelligenceQ1’21 YoY revenue growth accelerated to 146.7%. In fact, Q1’21 is the 11th consecutive quarter of >100% YoY revenue growth. The company’s main revenue driverGarena recorded a 111.4% YoY rise, while Shopee and other services recorded a 189.8% YoY increase.Gross margin also improved significantly compared to the prior year. Q1’21 gross margin came in at 36.6% as compared to 28.9% a year ago. In its respective segments, Garena’s gross margin also improved to 68.2% from 38.6% a year ago, while Shopee’s gross margin went up to 13.7% from 7.1% a year ago.SE’s LTM results. Data Source: S&P Global Market IntelligenceLooking across the longer-term trend using the LTM basis, we could also see similar fantastic top line performance. LTM YoY revenue growth came in at 113.7%, and gross margin also improved to 33% compared to 30.4% a year ago. Therefore, investors should be encouraged to know that Sea’s top line performance has been consistently getting better and better even as it scaled up fast, improving its cost of revenue ratio, showing just how capable the company is in being able to execute its growth strategies across multiple countries within its region.Investors may want to continue paying attention to the company’s sales and marketing spend as it still accounted for the majority of the operating expenses in both the Q and LTM results, respectively. More importantly, sales and marketing spend as a percentage of revenue has continued to fall as the company scaled up, reflecting improving cost efficiencies over time.SE’s OPEX as a % of Revenue (LTM Trend). Data Source: S&P Global Market IntelligenceThis has certainly helped to improve the company’s overall cost efficiencies over time, showing clearly the benefits of economies of scale of the company’s business model. LTM sales and marketing spend improved to 40.6% of revenue from 43.3% a year ago, while LTM overall operating expenses improved to 59.9% of revenue from 67.4% a year ago.This has helped to narrow the company’s LTM negative operating margin to -27% from -37%. Investors should be reminded not to focus on SE’s near-term operating margins as a gauge of the company’s core operating performance. This is because the company is still in the early stages (despite growing so rapidly) of penetrating Southeast Asia’s massive e-commerce market, of which it is the clear leader currently. The company is expected to continue investing heavily in sales and marketing, in order to drive the massive potential for growth in the region and to establish itself as the future undisputed e-commerce leader in the region taking the large majority of the pie, leaving the rest of its competitors to only be able to compete in their much smaller respective niche market segments, just like what Amazon (AMZN) had done in its established markets.In fact, Sea’s CEOForrest Li, who was named “Singapore Businessman of the Year at the 35th Singapore Business Awards in Nov 20” added:Let me put it this way, it (Shopee) can be profitable anytime. But I think what's really important to us is we think it's still very early days for e-commerce development. We are in a very good situation because Garena has been profitable - actually it's pretty profitable, and this gives us the resources to invest in Shopee, invest in SeaMoney. I think pretty soon, Shopee will turn to be profitable as well. In certain markets, like Taiwan, it's already profitable. And then we will have more resources; two cash flow generators: Garena and Shopee. This allows us to continually invest in future opportunities.I have previously discussed (articles listedhereandhere) how important it is for investors to focus on cash flows for companies with massive scalability potential like Coupang (CPNG) and Opendoor Technologies (OPEN) which are still in their early days of penetrating their respective markets.It is the same focus for Sea as we attempt to delve deeper into its cash flow generating ability. Sea uses Adjusted EBITDA to report its cash flow performance. I will present the discussion from FCF and EBITDA point of view first as a matter of consistency, before going over to the Adjusted EBITDA metrics.SE’s LTM CFO Margin and LTM FCF Margin. Data Source: S&P Global Market IntelligenceA quick glance over to its cash flow statement unveiled just how well-performing SE has been with its cash flow management. In fact, SE’s CFO and FCF performance has been improving remarkably over time as it scaled up quickly, and the company is just getting started. Its LTM CFO margins have been steadily improving over the previous year from -5.36% to 17.28% for the Q1’21 quarter. In addition, its LTM FCF margins also improved steadily over the previous year from -13.4% to 11.08%.SE’s EBITDA Margin & EBIT Margin. Data Source: S&P Global Market IntelligenceWhen we move over to its EBITDA margins, the improvement in trend of its core operating performance is also clearly discernible. Although it has yet to turn EBITDA positive, it was due mainly to necessary investments in sales and marketing.SE’s CapEx Margin & CFO Margin. Data Source: S&P Global Market IntelligenceSE has also benefited from the huge improvement in its core operating performance as seen in its CFO margin trend, while its heavy earlier CapEx investments have started to bear fruit as it scaled, as the CapEx margin is trending lower, and its CFO will now be able to sustain its CapEx moving forward.It’s very clear that SE’s business has well cleared its inflection point of heavy investments to scale up, and the company is well on its way to generate huge cash flows in the future as it continues to power ahead in its market penetration.SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market IntelligenceMoving ahead, we can also see that SE’s forward EBITDA margin trend is expected to significantly expand, while CapEx margin is expected to continue to fall. The company is on track to be a massive cash flow generator, with EBITDA margin expected to be about 43.8% by FY 30. Therefore, investors must be aligned with Sea’s long-term vision of focusing on growing its cash flows as it continues to penetrate the region’s markets. Based on its current growth trajectory, SE’s cash flow generating potential looks massive.AMZN’s & SE’s EBITDA Margin Forecast & CapEx Margin Forecast. Data Source: S&P Global Market IntelligenceWhen we bring in AMZN’s forecasts, I believe investors can clearly see what I mean. AMZN is already quite profitable based on its EBITDA margin, while SE’s EBITDA margin profitability is probably just getting started and SE is expected to grow its EBITDA margins much faster than AMZN, and this only goes to show the tremendous potential of the markets that SE is operating in. Investors are clearly reminded to give Shopee time to scale up to deliver the kind of cash flow profitability that will drive future returns.SE’s Adjusted EBITDA. Source: SE 6-KAs we move on to the segmented Adjusted EBITDA presented by the company, we can then infer what SE CEO Forrest Li meant by “Garena providing the resources for the company to invest in Shopee and SeaMoney.”The company is continuing to build on Garena’s success to deliver the resources needed to invest in Shopee and SeaMoney. Investors should consider Shopee and SeaMoney as an entity because they have tremendous synergies and are each other’s flywheel. Garena offers clear cash flow visibility for Shopee and SeaMoney to grow.Garena’s bookings reached $1.1B in Q1’21, which represents a 117.4% YoY increase. The bookings consist of current revenue and change in deferred revenue, the part which provides visibility into future revenue recognition.As can be seen, based on Adjusted EBITDA, which also included change in deferred revenue, SE has turned profitable. Unlike many other e-commerce companies or internet companies, SE already has a cash flow profitable Garena segment to provide the resources to drive its e-commerce and fintech segment growth. This combination is extremely powerful and, coupled with the company’s remarkable execution, has already brought FCF profitability to its operations, and soon EBITDA profitable. This will certainly allow SE to push even harder to drive more sustainable investments into more verticals and products to expand its ecosystem and further reduce the share of the pie available and pull itself further away from its closest competitors.Therefore, investors must continue to pay attention to the key growth drivers in Garena, and how the company intends to stretch its leadership further to protect its key cash flow generator until Shopee and SeaMoney become self-sustainable.Shopee’s Adjusted EBITDA per order. Source:TechinasiaAs Shopee continues to drive its fast expansion across the region, its unit economics have continued to improve remarkably, as it achieved operating efficiencies over time, leading to further reductions in Adjusted EBITDA loss per order. For Q1’21, the Adjusted EBITDA loss per order improved to $0.38, which represents a 38% YoY decline. As the company has guided earlier, it would not be long before Shopee achieves self-sustaining EBITDA profitability.What’s Next for Garena?At the Pocket Gamer Awards 2021, Garena received the Best Mobile Publisher Award, and Free Fire was also named the Best Battle Royale Game.Yet, according to the company, Garena’s most popular self-developedFree Fireisstill at an early stage of driving growth on the user base as well as pay user base for this game and developing it into a social platform where people not only come to play the core gameplay, but also enjoy other modes hangout, listen to music, social lives.”The company’s focus on Free Fire is notable as it is Garena’s most important revenue driver. Therefore the ability to scale Free Fire beyond just a game but into a social platform would bring Free Fire into its next phase of growth while continuing to grow its active user base and paying users. Sea also emphasized that the company continues to see “stickiness” in its active user metrics as the average active user spends about 2 to 3 hours daily on its platform. Not only has Garena grown its quarterly paying users 123.5% YoY, its quarterly paying users also represented 12.3% of quarterly active users (QAU) for Q1’21 as compared to 8.9% a year ago. Therefore driving the stickiness of the platform and encouraging more time spent among its active users would help to drive its paying user ratio up.Sea believes that one of the key factors that could help to drive Garena towards its vision of a social platform is dramatically increasing its modes of engagement with its users. This is not just restricted to online activities, but also offline community engagement programs. The whole intent is to develop a “broad-based platform stickiness” beyond its top active users, by building and growing the platform into a much larger community and provide the users ample opportunities to socialize and engage through its ongoing content development, and its promotion of community engagement.A key aspect of its community engagement strategies is focused on eSports. Sea believes that it operates the “largest mobile-game professional league in Southeast Asia, Taiwan and Brazil” and Free Fire was also named the “eSports Mobile Game of the Year at the eSports Awards 2020”. (Source: SE 20-F). The company continues to hold very large-scale eSports tournaments and events to strengthen its community engagement strategies such as Free Fire League Latinoamerica 2021, and its flagship Garena World event in April. On the 28th May, theFree Fire World Series 2021 Singapore(FFWS 2021 SG), which is Free Fire’s most prestigious eSports tournament, will take place in Singapore with a massive prize pool of US2M. Sea is showing no signs of ever letting the company’s most important revenue driver and most profitable segment to slip through its grip. Instead, it continues to build on its success as the leading eSports organizer in its markets.Garena is also looking way beyond the success of Free Fire and is constantly developing its games portfolio pipeline through constant R&D and product development with its “significant number of our more than 1,000 in-house game developers globally are constantly working on new ideas, while we continue to engage with third-party game studios for collaboration on promising and complementary game development and publishing opportunities.” (Source: SE Q1’21 earnings transcript)Expanding Shopee’s Global Footprint and VerticalsSea is actively expanding its presence in LatAm’s largest e-commerce market:Brazil, taking on MercadoLibre (MELI) in its most important market and with eyes on the whole LatAm. Although Sea is a relatively new player in e-commerce, having set up Shopee only in2015, the company is no stranger to taking on big incumbents. Shopee has already unseated the incumbent Alibaba-backed (BABA)Lazadaas the number one e-commerce platform in Southeast Asia. In addition, in its most important market, Indonesia, the company has also unseated incumbent Tokopedia as the leader, and Shopee was also recently reported to be themost visited e-commerce websiteamong Indonesian consumers in 2020.Sea further highlighted that the company continued to rank first in MAU and total time spent on apps in the shopping category across its markets in Southeast Asia, and in Indonesia it also recorded its fastest quarterly YoY growth rates on record. (Source: SE Q1’21 earnings transcript)Therefore, Sea is an extremely well-managed company, capable of pulling off challenging growth strategies against other large incumbents. Don’t bet against Sea.In addition, the company has also ventured into other verticals such as food delivery to expand its ecosystem. Sea sees food delivery as a complementary offering in Shopee. In Vietnam, Sea-owned food delivery service Now which it acquired in 2017 is already themarket leader, having unseated the incumbent Grab. The company also recently launched its food delivery service in Jakarta, Indonesia, with plans to launch into other cities in the future.The SeaMoney SynergiesSea’s fintech platform SeaMoney continues to see continued success and growth as mobile wallet services TPV recorded a YoY growth of almost 209% to $3.4B, as ShopeePay continues to ride on the coattails of Shopee’s rapid growth. The company also highlighted that according to Snapcart Indonesia’s survey in March, “ShopeePay was the most used, the most remembered and most liked mobile wallet by Indonesian consumers during the first quarter.” (Source: SE Q1’21 earnings transcript)The company is also aggressively expanding its off-platform use cases by establishing “partnerships with major consumer brands in Indonesia, one of which is their partnership with Indomaret, a leading Indonesian convenience store chain, as well as with Wendy’s(NASDAQ:WEN)and Domino’s Pizza(NYSE:DPZ).”The company has also continued to improve the utility within ShopeePay adding new features such as “Deals Near Me”, which was said to have driven “significant footfall to its onboarded offline merchants.”The strategy of incorporating the higher-margin digital financial services products such as wealth management products is also within the pipeline and is a natural extension of its fintech strategy. Although I believe this may be the most challenging aspect among its growth strategies within SeaMoney as financial services is a highly regulated market and the Southeast Asia region’s regulatory landscape largely differs between countries. Yet, it is still a key area of growth within the company’s overall fintech blueprint.GoTo: What Should Investors Look Out For In The Tokopedia And Gojek Merger?Much has been said recently regarding the SoftBank(OTCPK:SFTBY)and Alibaba-backedmergerbetween Tokopedia and Gojek and the risks it may pose to Sea’s leadership.What’s important for investors to note is that in my opinion, the move seems born out of a measure of “desperation” to save their own businesses from the growing prowess of Grab (AGC) and SE in Gojek’s case and SE in Tokopedia’s case who have been aggressively taking away their respective market share, eventually culminating in them losing their respective market leadership. Therefore, it’s a marriage of two “losing” incumbents who have failed to stem the charge of their strong and well-managed new market entrants in Sea and Grab. Sea and Grab are themselves no strangers to dislodging market-leading incumbents, with Grab having sentUber Technologies(UBER) packing home from Southeast Asia and BABA-backed Lazada getting overtaken by Sea in the Southeast Asian market.Grab’s food delivery business was reported to account for 53% of Indonesia’s food delivery market, while its ride-hailing business was reported to account for 64% of the Indonesian ride-hailing market in2019. Grab sees Indonesia as the crown jewel in its Southeast Asian portfolio, with Grab CEOAnthony Tanreportedly having spent a lot of time in Indonesia to oversee its growth strategies. With Grab projected to turnEBITDA profitable by 2023, I feel Gojek may have already crucially lost the initiative to Grab.Tokopedia, which was founded in 2009 had a head start of close to 6 years over Shopee, a huge amount of time in Tech before Shopee commenced operations in 2015. In just a short span of 6 years, not only has Tokopedia lost its leadership position to Shopee, ShopeePay has also overtaken all the other e-payment players in Indonesia in a mere two years, as ShopeePay now holds a38% share, well ahead of Grab-backed OVO and Gojek’s GoPay, both holding 19% share each. Remember the Shopee and ShopeePay’s synergies, it’s like a flywheel, each driving increased usage of the other, and leading further to increased GMV and TPV respectively. Shopee also reportedly understands Indonesian consumers’ needs better, especially among the female consumers as compared to Tokopedia according to a report byMomentum Works:For Shopee, fashion and beauty are the most popular product categories. On the other hand, Tokopedia is more established in mobile and electronics. This explains why many of the female Indonesians are going to Shopee instead. For mobile and electronics, you probably only buy them once or twice a year. For fashion and beauty, it’s a different story. You can buy it every other month and even if you do not buy, you browse a lot – sending traffic to the platform. Impulse buying is also common for these categories, which is just nice for an ecosystem of shoppers, products as well as influencers.With Sea having already turned Adjusted EBITDA profitable in Q1’21, the company is well ready to take on the challenges of this merger between the two incumbents, who may have already crucially lost their opportunities to “turn back time”, even with a merger that is perhaps too little too late.ValuationsPeers EV / Fwd Rev. Data Source: S&P Global Market IntelligenceWith such huge potential growth coming from Sea’s markets, Sea obviously trades at a premium when compared to its e-commerce peers, if we simply base off their respective expected revenue growth.Peers’ EBITDA Margin Forecast & CapEx Forecast. Data Source: S&P Global Market IntelligenceHowever, when we peek into Sea’s superior future cash flow generating capability using its projected EBITDA margins, we can see that Sea is only just getting started.Since the company is expected to produce predictable cash flows moving forward, I find it meaningful to conduct a DCF valuation framework to determine a range of fair values with the results presented below.Based on the DCF framework, I find SE undervalued by about 26% at the midpoint of its fair value range, with respect to the stock price of $246.33 as at 21 May 21. Therefore, I find the price level highly attractive.Range of Fair Values. Data Source: S&P Global Market IntelligenceWACC computation. Data Source: S&P Global Market IntelligenceFwd Rev & Fwd EBITDA. Data Source: S&P Global Market IntelligenceUnlevered FCF & Enterprise Value. Data Source: S&P Global Market IntelligenceEquity Value Bridge. Data Source: S&P Global Market IntelligencePrice Action and Technical AnalysisSource: TradingViewSE has been on a meteoric rise since Mar 20, and as at the date of writing (21 May 21), the stock was down by about 13% from its all-time high in Feb 21. The price level between $275 and $285 looks to be an area of key resistance and bull traps previously set to lure in late buyers.Key support is at $200, with the 50-period MA also serving as a key dynamic support area. I may continue to add more positions into this stock if the price level retraces nearer to $200 at the next retracement.Otherwise, investors who wish to initiate or add more positions may find the current price attractive.Further key support levels are currently at $179 and $155, areas that I would likely add very aggressively if the price was to retrace to those areas.ConclusionSea is a very well-managed and ambitious integrated Internet company that looks to be at the next phase of its rapid growth and profitability. Investors may wish to take advantage of the current consolidation phase to gain entry or add positions to this potentially massive cash flow machine.","news_type":1},"isVote":1,"tweetType":1,"viewCount":376,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":124700856,"gmtCreate":1624787495075,"gmtModify":1703845154296,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"⬆️","listText":"⬆️","text":"⬆️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/124700856","repostId":"2146090006","repostType":4,"repost":{"id":"2146090006","pubTimestamp":1624755315,"share":"https://ttm.financial/m/news/2146090006?lang=&edition=fundamental","pubTime":"2021-06-27 08:55","market":"us","language":"en","title":"5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021","url":"https://stock-news.laohu8.com/highlight/detail?id=2146090006","media":"Motley Fool","summary":"These growth and value stocks are begging to be bought by investors.","content":"<p>When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking the reins of <b>Berkshire Hathaway</b> (NYSE:BRK.A)(NYSE:BRK.B) in the mid-1960s, Buffett's company has averaged an annual return of 20%. This works out to an aggregate gain of greater than 2,800,000% for its Class A shares.</p>\n<p>Although Buffett isn't perfect, he and his investing team have a knack for identifying attractively valued businesses that have clear competitive advantages. As we prepare to move into the second half of 2021, the following five Buffett stocks stand out as those that should be bought hand over fist.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1077c8372814d2b8150e933b4c608005\" tg-width=\"700\" tg-height=\"466\"><span>Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.</span></p>\n<h2>Amazon</h2>\n<p>Even though Buffett's investing lieutenants, Todd Combs and Ted Weschler, are the architects behind Berkshire Hathaway's stake in <b>Amazon</b> (NASDAQ:AMZN), it's arguably the Buffett stock that should be bought most aggressively ahead of the second half of the year.</p>\n<p>As most folks probably know, Amazon is an e-commerce juggernaut. Based on an April report from eMarketer, the company effectively controls $0.40 of every $1 spent online in the United States. It's also pivoted its online retail popularity into signing up more than 200 million people to its Prime program worldwide. The fees Amazon collects from Prime help it to undercut its competition on price. And it certainly doesn't hurt that Prime members tend to spend many multiples more than non-Prime shoppers during the course of the year.</p>\n<p>But it's the company's cloud infrastructure service, Amazon Web Services (AWS), that has truly budded into a star. Since the operating margins associated with cloud infrastructure are considerably higher than what Amazon nets from retail and advertising, AWS' growth is leading to a surge in operating cash flow. If investors were to continue to pay the midpoint of Amazon's operating cash flow multiple over the past decade, it could hit $10,000 a share by 2025.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b18b49b2b35da2fc49e0a83b883d1c22\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Bristol Myers Squibb</h2>\n<p>Pharmaceutical stocks are money machines, and none looks to be more attractive on a valuation basis than <b>Bristol Myers Squibb</b> (NYSE:BMY).</p>\n<p>One reason to be excited about this drug developer is its organic growth potential. Eliquis, which was co-developed with <b>Pfizer</b>, has blossomed into the world's leading oral anticoagulant, with sales expected to surpass $10 billion in 2021. Meanwhile, dozens of additional clinical trials are underway for cancer immunotherapy Opdivo, which generated $7 billion in sales last year. This offers plenty of opportunity to expand Opdivo's label and pump up its pricing power.</p>\n<p>Another reason Bristol Myers Squibb is such an intriguing stock is its November 2019 acquisition of cancer and immunology company Celgene. Buying Celgene brought the blockbuster multiple-myeloma drug Revlimid into the fold. Revlimid has sustainably grown its annual sales by a double-digit percentage for more than a decade, with label expansion, longer duration of use, and pricing power all playing a role. This key treatment, which topped $12 billion in sales last year, is protected from a full onslaught of generic competition until early 2026. That means Bristol Myers will be rolling in the dough for another five years, at minimum.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1b152e369d7c967dcbc926192ee888c1\" tg-width=\"700\" tg-height=\"531\"><span>Image source: Getty Images.</span></p>\n<h2>Mastercard</h2>\n<p>Everyone seems to be looking for the smartest recovery play from the pandemic. Payment processor <b>Mastercard</b> (NYSE:MA) might well be the safest way to take advantage of a steady uptick in consumer and enterprise spending.</p>\n<p>Mastercard isn't a cheap stock by any means -- at 36 times Wall Street's forward-year earnings consensus -- but it benefits from a simple numbers game. While economic contractions and recessions are inevitable, these periods of turbulence tend to be short-lived. By comparison, economic expansions often last many years. Buying into Mastercard allows investors to take full advantage of these long periods of economic expansion and robust spending. Plus, it doesn't hurt that Mastercard has the second-highest share of credit-card network purchase volume in the U.S., the leading market for consumption.</p>\n<p>Investors can also sleep easy with the understanding that Mastercard strictly sticks to payment facilitation. Even though some of its peers also lend, and are therefore able to generate interest income and fees during bull markets, Mastercard has avoided becoming a lender. It's something you'll truly appreciate when a recession strikes. Whereas most financial stocks will be forced to set aside capital to cover credit or loan delinquencies, Mastercard won't have to. This is a big reason it bounces back from recessions quicker than most financial stocks.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e4e1a1fe028efa4c966b66ef2cd466f5\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Teva Pharmaceutical Industries</h2>\n<p>If you have an appetite for turnaround plays, brand-name and generic-drug developer <b>Teva Pharmaceutical Industries</b> (NYSE:TEVA) is the stock to buy hand over fist for the second half of 2021. Like Amazon, it's a stock that was added to Berkshire Hathaway's portfolio by either Combs or Weschler and not Buffett.</p>\n<p>While there's no denying that Teva has its fair share of hurdles to overcome, the company's turnaround-focused CEO, Kare Schultz, has been a blessing. Since taking the helm less than four years ago, Schultz has helped shave off more than $10 billion in net debt, and he's overseen the reduction of roughly $3 billion in annual operating expenses. There's more work to do to improve Teva's balance sheet, but the company is very clearly on much firmer ground than it was back in 2016-2017.</p>\n<p>Schultz also has the potential to play peacemaker for a number of outstanding lawsuits targeting Teva's role in the opioid crisis. If this litigation can be resolved with minimal cash outlay, Teva's valuation could soar. At just 4 times the company's projected earnings in 2021, Teva is about as cheap as a healthcare stock can get.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/44a30c4dfd6886a29e22d3c6558c3e56\" tg-width=\"700\" tg-height=\"466\"><span>Image source: Getty Images.</span></p>\n<h2>Bank of America</h2>\n<p>Lastly, bank stock <b>Bank of America</b> (NYSE:BAC) has the look of a company that can be confidently bought hand over fist for the second half of 2021.</p>\n<p>For much of the past decade, the Federal Reserve has kept interest rates at or near historic lows. That's meant less in the way of interest income for banks. But the latest update from the nation's central bank suggests that interest rates could begin creeping up in 2023, a year earlier than previously forecast. Bank of America is the most interest-sensitive money-center bank. According to its first-quarter investor presentation, BofA would generate $8.3 billion in net interest income on a 100-basis-point shift in the interest rate yield curve. Translation: Bank of America's profits should rocket higher beginning in 2023-2024.</p>\n<p>At the same time, BofA has done an outstanding job of controlling its costs and improving its operating efficiency. Investments in digitization have resulted in higher mobile app and digital banking use, which is allowing the company to consolidate some of its branches. Even with its shares at a 13-year high, Bank of America has plenty left in the tank.</p>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n5 Buffett Stocks to Buy Hand Over Fist for the Second Half of 2021\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-27 08:55 GMT+8 <a href=https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BMY":"施贵宝","BAC":"美国银行","MA":"万事达","BRK.A":"伯克希尔","TEVA":"梯瓦制药","BRK.B":"伯克希尔B","AMZN":"亚马逊"},"source_url":"https://www.fool.com/investing/2021/06/26/buffett-stocks-buy-hand-over-fist-second-half-2021/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2146090006","content_text":"When Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay very close attention. That's because the Oracle of Omaha's track record is virtually unsurpassed. Since taking the reins of Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) in the mid-1960s, Buffett's company has averaged an annual return of 20%. This works out to an aggregate gain of greater than 2,800,000% for its Class A shares.\nAlthough Buffett isn't perfect, he and his investing team have a knack for identifying attractively valued businesses that have clear competitive advantages. As we prepare to move into the second half of 2021, the following five Buffett stocks stand out as those that should be bought hand over fist.\nBerkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.\nAmazon\nEven though Buffett's investing lieutenants, Todd Combs and Ted Weschler, are the architects behind Berkshire Hathaway's stake in Amazon (NASDAQ:AMZN), it's arguably the Buffett stock that should be bought most aggressively ahead of the second half of the year.\nAs most folks probably know, Amazon is an e-commerce juggernaut. Based on an April report from eMarketer, the company effectively controls $0.40 of every $1 spent online in the United States. It's also pivoted its online retail popularity into signing up more than 200 million people to its Prime program worldwide. The fees Amazon collects from Prime help it to undercut its competition on price. And it certainly doesn't hurt that Prime members tend to spend many multiples more than non-Prime shoppers during the course of the year.\nBut it's the company's cloud infrastructure service, Amazon Web Services (AWS), that has truly budded into a star. Since the operating margins associated with cloud infrastructure are considerably higher than what Amazon nets from retail and advertising, AWS' growth is leading to a surge in operating cash flow. If investors were to continue to pay the midpoint of Amazon's operating cash flow multiple over the past decade, it could hit $10,000 a share by 2025.\nImage source: Getty Images.\nBristol Myers Squibb\nPharmaceutical stocks are money machines, and none looks to be more attractive on a valuation basis than Bristol Myers Squibb (NYSE:BMY).\nOne reason to be excited about this drug developer is its organic growth potential. Eliquis, which was co-developed with Pfizer, has blossomed into the world's leading oral anticoagulant, with sales expected to surpass $10 billion in 2021. Meanwhile, dozens of additional clinical trials are underway for cancer immunotherapy Opdivo, which generated $7 billion in sales last year. This offers plenty of opportunity to expand Opdivo's label and pump up its pricing power.\nAnother reason Bristol Myers Squibb is such an intriguing stock is its November 2019 acquisition of cancer and immunology company Celgene. Buying Celgene brought the blockbuster multiple-myeloma drug Revlimid into the fold. Revlimid has sustainably grown its annual sales by a double-digit percentage for more than a decade, with label expansion, longer duration of use, and pricing power all playing a role. This key treatment, which topped $12 billion in sales last year, is protected from a full onslaught of generic competition until early 2026. That means Bristol Myers will be rolling in the dough for another five years, at minimum.\nImage source: Getty Images.\nMastercard\nEveryone seems to be looking for the smartest recovery play from the pandemic. Payment processor Mastercard (NYSE:MA) might well be the safest way to take advantage of a steady uptick in consumer and enterprise spending.\nMastercard isn't a cheap stock by any means -- at 36 times Wall Street's forward-year earnings consensus -- but it benefits from a simple numbers game. While economic contractions and recessions are inevitable, these periods of turbulence tend to be short-lived. By comparison, economic expansions often last many years. Buying into Mastercard allows investors to take full advantage of these long periods of economic expansion and robust spending. Plus, it doesn't hurt that Mastercard has the second-highest share of credit-card network purchase volume in the U.S., the leading market for consumption.\nInvestors can also sleep easy with the understanding that Mastercard strictly sticks to payment facilitation. Even though some of its peers also lend, and are therefore able to generate interest income and fees during bull markets, Mastercard has avoided becoming a lender. It's something you'll truly appreciate when a recession strikes. Whereas most financial stocks will be forced to set aside capital to cover credit or loan delinquencies, Mastercard won't have to. This is a big reason it bounces back from recessions quicker than most financial stocks.\nImage source: Getty Images.\nTeva Pharmaceutical Industries\nIf you have an appetite for turnaround plays, brand-name and generic-drug developer Teva Pharmaceutical Industries (NYSE:TEVA) is the stock to buy hand over fist for the second half of 2021. Like Amazon, it's a stock that was added to Berkshire Hathaway's portfolio by either Combs or Weschler and not Buffett.\nWhile there's no denying that Teva has its fair share of hurdles to overcome, the company's turnaround-focused CEO, Kare Schultz, has been a blessing. Since taking the helm less than four years ago, Schultz has helped shave off more than $10 billion in net debt, and he's overseen the reduction of roughly $3 billion in annual operating expenses. There's more work to do to improve Teva's balance sheet, but the company is very clearly on much firmer ground than it was back in 2016-2017.\nSchultz also has the potential to play peacemaker for a number of outstanding lawsuits targeting Teva's role in the opioid crisis. If this litigation can be resolved with minimal cash outlay, Teva's valuation could soar. At just 4 times the company's projected earnings in 2021, Teva is about as cheap as a healthcare stock can get.\nImage source: Getty Images.\nBank of America\nLastly, bank stock Bank of America (NYSE:BAC) has the look of a company that can be confidently bought hand over fist for the second half of 2021.\nFor much of the past decade, the Federal Reserve has kept interest rates at or near historic lows. That's meant less in the way of interest income for banks. But the latest update from the nation's central bank suggests that interest rates could begin creeping up in 2023, a year earlier than previously forecast. Bank of America is the most interest-sensitive money-center bank. According to its first-quarter investor presentation, BofA would generate $8.3 billion in net interest income on a 100-basis-point shift in the interest rate yield curve. Translation: Bank of America's profits should rocket higher beginning in 2023-2024.\nAt the same time, BofA has done an outstanding job of controlling its costs and improving its operating efficiency. Investments in digitization have resulted in higher mobile app and digital banking use, which is allowing the company to consolidate some of its branches. Even with its shares at a 13-year high, Bank of America has plenty left in the tank.","news_type":1},"isVote":1,"tweetType":1,"viewCount":192,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":136859615,"gmtCreate":1622008146637,"gmtModify":1704365978703,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"Monitoring ","listText":"Monitoring ","text":"Monitoring","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/136859615","repostId":"1170860218","repostType":2,"repost":{"id":"1170860218","pubTimestamp":1621583624,"share":"https://ttm.financial/m/news/1170860218?lang=&edition=fundamental","pubTime":"2021-05-21 15:53","market":"us","language":"en","title":"Roblox: Building The Metaverse, But For Whom?","url":"https://stock-news.laohu8.com/highlight/detail?id=1170860218","media":"seekingalpha","summary":"Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, ","content":"<p><b>Summary</b></p>\n<ul>\n <li>Roblox is effectively the YouTube of game development and game consumption.</li>\n <li>Game creators, who are often just average people with little in the way of coding skills, can build games on the platform and sell those games to users of the platform.</li>\n <li>The platform has something of its own economy, in which Robux are used as currency to purchase games and for micro-purchases within those games.</li>\n <li>Historically, a very young demographic has found the platform appealing, leading to questions about its ability to evolve upstream and create a true metaverse.</li>\n <li>Roblox has rapidly grown, and in this note, we provide a very deep and comprehensive exploration of the platform. Ultimately, we rate the company a modest buy.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1a50e6bae4d28d9fb1a3a3b477be5436\" tg-width=\"1536\" tg-height=\"1024\" referrerpolicy=\"no-referrer\"><span>Photo by Ian Tuttle/Getty Images Entertainment via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Roblox (RBLX) is a social gaming marketplace platform that connects gamers and developers. Through its global community of 8 million-plus developers, Roblox provides immersive gaming experiences that are shared by millions of gamers. In 2020, mobile gaming platforms like Roblox saw explosive growth in revenue as users flocked to these platforms during coronavirus-enforced lockdowns. A year of bookings stagnation awaits Roblox as demand for mobile gaming normalizes. However, AR/VR is just getting started, and the company has a long growth runway due to the large size of its TAM. Roblox is a free cash flow generation machine, as we will learn in this article, but the current valuation is a little too steep considering the weak guidance for 2021.</p>\n<p><i><b>Here's our investment thesis for Roblox:</b></i></p>\n<ul>\n <li><p>Roblox is a platform that enables users to enjoy millions of immersive 3D experiences (primarily games). Like YouTube, Roblox's content is user generated. Today, Roblox has more than 32M daily active users and 8M+ developers on its platform.</p></li>\n <li><p>Right from its inception in 2006, Roblox has been led by its visionary founder - David Baszucki. His vision for social gaming and shared virtual experiences is the driving force behind the company's admirable success.</p></li>\n <li><p>Roblox is a highly profitable business that's growing like a weed at scale. In 2020, Roblox's business was boosted by the coronavirus pandemic as mobile gaming saw exponential growth. However, the rise in mobile gaming is a secular growth trend. Furthermore, AR/VR technology is set to go mainstream over the coming years, which will likely help Roblox drive future revenue growth.</p></li>\n <li><p>The Roblox platform is powered by advanced proprietary technology. Developers create content using Roblox Studio, and consumers (gamers) access this content through Roblox Client (interface to 3D digital worlds). Money is made through the sale of Roblox's virtual currency - Robux, which players use to make in-game purchases.</p></li>\n <li><p>For 2021, Roblox is expecting revenue to grow from $923M to ~$1450M. However, the bookings are projected to rise by just 10% year-over-year (near-stagnation), and free cash flow is set to decline too. The company is well capitalized, and it's already free cash flow generative, so I do not foresee any significant dilutionary events for Roblox.</p></li>\n <li><p>During the recent correction in high-growth tech stocks, Roblox has surprisingly held on to its IPO bounce. There are many great deals out there in the market right now. However, Roblox is not one of them. The stock is trading at a premium of 20% to its fair value. Since the expected returns for Roblox is less than BTM's investment hurdle rate, I rate it hold at $70.</p></li>\n <li><p>Roblox is a great company, which I would buy on dips. At BTM, we will initiate a starter position below $60 (if we get such an opportunity). For now, Roblox is being added to our primary portfolio as a hold.</p></li>\n</ul>\n<p>In today's article, we will study Roblox's business in detail, analyze its financials, and determine its fair value.</p>\n<p><b>Introducing Roblox</b></p>\n<p>Roblox is a social gaming platform where an average of 37.1 million people from around the world come to play games with friends on a daily basis. While on Roblox, users can play, learn, explore, and communicate in user-generated virtual realities (games with 3D digital worlds) created by Roblox's community of 8M+ game developers. Roblox terms this emerging category as \"human co-experience\", which it considers to be the new form of social interaction (and this idea was envisioned by Roblox way back in 2004).</p>\n<p>The Roblox platform is powered by user-generated content (like YouTube (GOOG)(NASDAQ:GOOGL)) and draws inspiration from gaming, entertainment, social media, and even toys. This emerging category is also referred to as the metaverse - a term often used to describe the concept of persistent, shared, 3D virtual spaces in a virtual universe. I discussed this concept in a note entitled, \"Introducing President Mark Zuckerberg.\"</p>\n<p>The idea of a metaverse has been written about by futurists and science fiction authors for over 30 years. With the advent of increasingly powerful consumer computing devices, cloud computing, and high bandwidth internet connections, the concept of the metaverse is materializing.</p>\n<p>The Roblox human co-experience platform serves as the underlying technology and infrastructure that supports shared experiences for millions of users, and it consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud.</p>\n<ul>\n <li><p><i><b>Roblox Client</b></i>- The application that allows users to explore 3D digital worlds.</p></li>\n <li><p><i>Roblox Studio</i>- The toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client.</p></li>\n <li><p><i>Roblox Cloud</i>- The services and infrastructure that power the human co-experience platform.</p></li>\n</ul>\n<p>Roblox's mission is to build a human co-experience platform that enables shared experiences among billions of users. Since its inception, Roblox has invested heavily in building the Roblox platform, and ~80% of Roblox's employees are dedicated to maintaining, improving, and expanding the platform. The company is constantly improving the ways in which the Roblox platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers to how they are enjoyed and safely accessed by users across the globe.</p>\n<p>According to Roblox's S-1 filing, the Roblox platform is differentiated through a number of key characteristics, which are mentioned below (the following are quoted from the company's S-1 linked just a moment ago):</p>\n<blockquote>\n <i>Identity:All users have unique identities in the form of avatars that allow them to express themselves as whoever or whatever they want to be. These avatars are portable across experiences.</i>\n</blockquote>\n<blockquote>\n <i>Friends: Users interact with friends, some of whom they know in the real world, and others who they meet on Roblox.</i>\n</blockquote>\n<blockquote>\n <i>Immersive</i>\n <i><b>:</b></i>\n <i>The experiences on Roblox are 3D and immersive. As we continue to improve the Roblox Platform, these experiences will become increasingly engaging and indistinguishable from the real world.</i>\n</blockquote>\n<blockquote>\n <i>Anywhere: Users, developers, and creators on Roblox are from all over the world, including North America, Europe, South America, Asia, Australia, and Africa. In 2019, we entered into a joint venture agreement with Songhua River Investment Limited, or Songhua, an affiliate of Tencent, to operate a Chinese version of the Roblox Platform that will be operated and published in China by Tencent under the name “Luobulesi.” Further, as of December 31, 2020, the Roblox Client operates on iOS, Android, PC, Mac, and Xbox, and supports VR experiences on PC using Oculus Rift and HTC Vive headsets.</i>\n</blockquote>\n<blockquote>\n <i>Low Friction: It is simple to set up an account on Roblox and free for users to enjoy experiences on the platform. Users can quickly traverse between and within experiences either on their own or with their friends. It is also easy for developers to build experiences and then publish them to the Roblox Cloud so that they are then accessible to users on the Roblox Client across all platforms. On behalf of the developers and creators, Roblox also provides critical services such as user acquisition, billing, collections, content moderation, translation, safety, regulatory compliance, and customer support. This makes it easier and simpler for even individual developers and creators and small studios to be successful developers and creators.</i>\n</blockquote>\n<blockquote>\n <i>Variety of Content: Roblox is a vast and expanding universe of developer and creator-built content. As of Dec. 31, 2020, there were over 20 million experiences on Roblox, and in the year ended Dec. 31, 2020, over 13 million of these were experienced by our community. These ranged from experiences that simulate building and operating a theme park to adopting a pet, scuba diving, creating and playing your own superhero, and more. There also are millions of creator-built virtual items, such as hats, shirts, and pants, with which users can personalize their avatars and 3D virtual items, assets, and sounds that creators can incorporate into experiences. Historically, Roblox has also created virtual items with which users can personalize their avatars. Our focus today and going forward, however, is on user-generated content.</i>\n</blockquote>\n<blockquote>\n <i>Economy: Roblox has a vibrant economy built on a currency called Robux. Users who choose to purchase Robux can spend the currency on experiences and on items for their avatar. Developers and creators earn Robux by building engaging experiences and compelling items that users want to purchase. Roblox enables developers and creators to convert Robux back into real-world currency.</i>\n</blockquote>\n<blockquote>\n <i>Safety: Multiple systems are integrated into the Roblox Platform to promote civility and ensure the safety of our users. These systems are designed to enforce real-world laws and are designed to extend beyond minimum regulatory requirements.</i>\n</blockquote>\n<p>The revenue growth at Roblox has been driven primarily by significant investments in technology and two mutually reinforcing network effects: content and social.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2d5e601c76dc33b042de56f0d000fecc\" tg-width=\"640\" tg-height=\"194\"><span>Source:Roblox S-1</span></p>\n<p>Roblox's platform is powered by user-generated content that's built by an engaged community of developers and creators. As Roblox's developers and creators build increasingly high-quality content, more users are attracted to their platform. The more users on the platform, the higher the engagement and the more attractive Roblox becomes to developers and creators. With more users, more Robux (Roblox's virtual currency) is spent on the platform, which in turn incentivizes developers to build more engaging content for users and attracts new developers and content creators to the Roblox developer community.</p>\n<p>The social nature of Roblox's platform makes it special. Roblox's users typically play with friends, and this inspires them to invite more friends to the platform, who, in turn, invite their friends, driving organic growth. A higher number of friends on the platform leads to increased long-term user engagement. Therefore, more and more users join Roblox's platform through word-of-mouth marketing from their existing friends using the platform.</p>\n<p>Now that we have an understanding of Roblox's platform, let's see how Roblox's economy functions, in other words, how Roblox makes money:</p>\n<p>Roblox is powered by exclusive user-generated games that include personalized avatars. Upon joining Roblox, gamers can personalize their avatars by choosing body types, clothes, and other accessories. To do so, the gamers purchase a virtual currency (Robux) from within Roblox's platform. Game developers and content creators earn Robux through microtransactions in their games, such as selling in-game virtual items and engagement-based rewards. Through Roblox's Developer Exchange Program, developers can exchange Robux for real-world currency. This is how money flows from gamers to developers on Roblox's platform.</p>\n<p>The income generated through Roblox empowers game developers (individuals and game studios) to invest in higher-quality content, which attracts more gamers to Roblox. Having enjoyed Roblox, users tend to invite more friends to play on the platform, and this helps game developers attract larger audiences. According to Roblox, many users eventually become developers on the platform, and nearly all Roblox developers started as users. Therefore, Roblox has a robust community and a vibrant economy.</p>\n<p>Roblox supports its developer community by providing tools to create, publish, operate, and monetize content (games and experiences). In 2020, more than 1.25M developers earned Robux, and ~4,300 developers qualified for Roblox's Developer Exchange Program, making them eligible to exchange their earned Robux for real-world currency. To qualify for the Developer Exchange Program, the developers need to meet certain conditions, such as:</p>\n<ul>\n <li><p>Earn at least 100,000 Robux,</p></li>\n <li><p>Verified developer account, and</p></li>\n <li><p>Account must be in good standing.</p></li>\n</ul>\n<p>In 2020, more than 3300 developers exchanged Robux for real-world currency. According to Roblox's disclosures, 1,250-plus developers earned more than $10K in 2020, whereas 300-plus developers made more than $100K in the same period.</p>\n<p>Generally, Roblox users can create an avatar and explore experiences for free after joining the platform. However, the business model for any given game is decided by its developer. Within these free games, users can spend Robux to purchase in-game enhancements and items such as clothing, gear and emotes, from Roblox's Avatar Marketplace. As you may already know, Roblox retains a portion of every Robux transaction and distributes the rest to developers.</p>\n<p>Important Note: Robux can only be purchased from Roblox at a price set by Roblox and can only be spent within its platform.</p>\n<p><i><b>Key Disclosure from Roblox in relation to Robux:</b></i></p>\n<p>Other than daily and monthly limitations to prevent fraud, there's no cap on the number of Robux that any user or users in the aggregate can purchase. Robux has no monetary or intrinsic value outside of our platform and can only be converted to US dollars through our Developer Exchange Program. We're aware that some users seek to use unauthorized third-party websites to exchange Robux for real-world currency, which is not permitted under our terms of use. We regularly monitor and screen usage of our platform with the aim of identifying and preventing these activities, as well as regularly send cease-and-desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ede644886149994d8bf4d76e109903da\" tg-width=\"640\" tg-height=\"183\"><span>Source:Roblox S-1</span></p>\n<p>Gamers primarily purchase Robux in two ways: 1. One-time purchases or 2. Roblox Premium subscription service. Roblox accepts payments through (Apple’s and Google’s) app stores, credit cards, and debit cards. In 2020, the average price for a Robux was $0.01. Roblox Premium is billed monthly, and this subscription service includes discounts on Robux purchases, exclusive access to certain in-experience benefits, some exclusive and discounted marketplace items, and the ability to buy, sell and trade certain Avatar items. In 2020, Roblox’s bookings (sale of Robux) came in at $1.8B, which means that Roblox’s ~140M users spent an average of $12.85 on the platform (the average revenue per daily active users is much higher at about $60).</p>\n<p>For developers, Robux is considered \"earned\" if and when a developer receives them as payments for a bonafide third-party transaction for virtual goods through the Roblox Platform. Currently, developers can earn Robux via the following mechanisms:</p>\n<ul>\n <li><p>Sale of access to experiences (games) and in-game enhancements,</p></li>\n <li><p>Engagement-based payouts for the amount of time that Roblox Premium subscribers spend in their experiences,</p></li>\n <li><p>Sale of content and tools within the developer community, and</p></li>\n <li><p>Sale of virtual items to gamers through the Avatar Marketplace.</p></li>\n</ul>\n<p>As Roblox users’ purchase and spend Robux on the platform, developers receive 70% of the Robux spent within their games and 70% of the Robux spent on Roblox's Studio Marketplace items. Content creators receive only 30% of the Robux spent for their Avatar Marketplace items. The earned Robux are deposited into the virtual accounts of the developers and creators, who (if qualified) can convert Robux into U.S. dollars at an exchange rate which is (again) set by Roblox (in its sole discretion) at 1 Robux to $0.0035 (conversion price as of Dec. 31, 2020).</p>\n<p>As you may remember, the average purchase price of a Robux was $0.01 in 2020, and now we know that developers can exchange a Robux for $0.0035 (35% of Robux’s purchase price). Therefore, the unit economics are undoubtedly tilted in favor of Roblox, and the virtual economy built within Roblox’s ecosystem gives the company massive controlling power.</p>\n<p>In 2020, Roblox’s qualified developers (Developer Exchange Program) earned $328.7M, up from $112M in 2019. The growth in developer earnings resulted from a growth in qualified developers, a rise in DAUs, and higher engagement with consumers. As an aside, Roblox’s developers do not always cash out their Robux into real-world currency as they can reinvest their Robux into developer tools available in the Studio Marketplace, promote their games through Roblox’s internal ad network, or spend the Robux as any other Roblox gamer would (on experiences and in-game purchases).</p>\n<p>The Roblox platform combines significant bookings (sale of Robux) (and, by extension, revenue) with strong unit economics to generate massive amounts of free cash flow.</p>\n<p><b>Roblox Had A Great 2020, But What Next?</b></p>\n<p>In 2020, the coronavirus pandemic boosted the mobile gaming industry as people (kids, to be precise) stayed home during lockdowns. Roblox's social gaming platform saw an influx of new users, and bookings shot up to over $2B. As you can see, Roblox's revenues grew by 81% y/y to $923M last year.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/fc0cfffc9c8d80819d91a250992a9898\" tg-width=\"578\" tg-height=\"211\"><span>Source:Roblox S-1</span></p>\n<p>The rapid revenue growth is attributable to an increase in numbers of active users and higher user engagement (and spending). Roblox's DAUs went up from 19M to 37M within a year, while average bookings per DAU shot up to $17.30 from $12.37. For Q4, total hours engaged came in at 8.4B hours, a figure that represented substantial growth on a y/y basis; however, it also represented a q/q decline.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/177a566cf075069e89d034c2be758743\" tg-width=\"640\" tg-height=\"97\"><span>Source:Roblox S-1</span></p>\n<p>Although Roblox's operations continue to lose money, the company is actually generating massive amounts of free cash flow. The bookings made on Roblox's platform convert to revenue over time as in-game virtual goods are consumed or amortized (in accordance with the average life of the consumer).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5f39e4d22bafd479e902ab3f1665fdc8\" tg-width=\"638\" tg-height=\"253\"><span>Source:Roblox S-1</span></p>\n<p>On the back of ultra-strong numbers in 2020, Roblox's public listing seems to be timed to perfection. From a reference price of $45, the stock rallied higher on the direct listing day and has continued to trade up at ~$65-80 range. Here's what Roblox's CEO had to say on the listing:</p>\n<p>Source:Roblox CEO David Baszucki on the company's Wall Street debut</p>\n<p>Roblox's growth numbers for 2020 were mind boggling. However, the expectations for 2021 are lukewarm (and rightly so). With the pandemic fading away, people are returning towards normality, and a reduction in hours spent on gaming is a certainty.</p>\n<p>For 2021, Roblox is expecting DAU growth of just 6%, with flat numbers for hours engaged. Although the company expects revenue to grow by 60% y/y, bookings (closer estimation of Roblox's actual growth) are expected to grow at just 10% y/y.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/45e3095d76d9eae90689957db0de751e\" tg-width=\"640\" tg-height=\"477\"><span>Source:Roblox S-1</span></p>\n<p>As bookings growth moderates and the company spends more on R&D to drive future growth, the company's free cash flow is set to decline in 2021. Therefore, I would not expect fireworks to continue for Roblox's stock over the coming year as it faces tough comps.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/00d25029806cc3b0dad1e9efd61ffa8c\" tg-width=\"362\" tg-height=\"279\"><span>Source:Roblox S-1</span></p>\n<p>With that being said, Roblox's growth story is far from over. In fact, I can envision a very long growth runway for Roblox (similar to Unity). The growth of interactive, real-time 3D content across numerous industries (like Gaming, Architecture, 3D printing/Intelligent Manufacturing, AR/VR, and many more) will drive the demand for Roblox's platform higher over the coming years.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/eb11e9e1f7a643251919f7571ebe5b76\" tg-width=\"800\" tg-height=\"389\"><span>Source:Newzoo</span></p>\n<p>In 2020, mobile gaming was the fastest-growing industry among all forms of gaming, and it's now believed to be worth $77.2B. And by 2025, it's expected to be worth$150B per annum. Naturally, Roblox will benefit from the rapid growth in mobile gaming. Therefore, Roblox is supported by a very powerful secular growth trend, i.e., the rise of mobile gaming.</p>\n<p>However, the real upside for Roblox's platform will come from the mainstream adoption of AR/VR technology. These markets are set to see explosive growth over upcoming years:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/33223820bc4aa2314eaa98345d74820c\" tg-width=\"900\" tg-height=\"466\"><span>Source:DevTeam</span></p>\n<p>Economically viable virtual realities are already all around us in that games are massively profitable and are pseudo-virtual realities. I believe that this market will actually accelerate as wide-scale adopted virtual realities begin popping up over the next decade or two, many of which will likely be built atop platforms such as Roblox and Unity.</p>\n<p>Although I like Unity, I believe that Roblox's platform has greater potential due to the democratization of content generation. Roblox is transforming the world of interactive gaming by changing how people express themselves, play, socialize, learn, and transact together. According to the management, Roblox is currently focused on the following growth initiatives:</p>\n<ul>\n <li><p>Platform Extension: Roblox is continually investing to extend its platform. These investments include high fidelity avatars, 3D spatial audio technology, and additional social features. In the future, Roblox can expand into other areas like entertainment, e-learning (education), and enterprise work communications. For example, developers will be able to create and host virtual meetings, classrooms, concerts, and conferences on the Roblox platform.</p></li>\n <li><p>Age Demographics Expansion: Today, a large chunk of Roblox’s users are kids below the age of 13. However, platform extension will enable developers to build higher quality experiences (games and other content) that are curated to meet the needs of an older age demographic. If Roblox can successfully increase its penetration among other older age categories, then it can easily grow at swashbuckling rates for years to come.</p></li>\n <li><p>International Reach: Roblox already is a global platform. However, there's still significant potential for the company to grow in international markets. Today, almost all of Roblox’s revenue comes from the United States, Canada, and United Kingdom. Hence, there are big markets for Roblox to expand its presence. Roblox is expecting the same organic, word-of-mouth user and developer growth in international markets that the platform has experienced in its primary markets. Additionally, Roblox is making massive investments in technology to enhance growth across the globe. For example, features such as built-in regional compliance and automated language translation can enable Roblox to scale operations in global markets, allowing developers to publish games (or content) in multiple languages and allowing users (speaking different languages) to communicate effectively. Roblox’s greatest international opportunity today is China, and the company is addressing this opportunity through a joint venture with Songhua (an affiliate of Tencent, which is one of the leading internet companies in China).</p></li>\n <li><p>Monetization: Roblox believes that its platform has massive monetization potential. To improve monetization, Roblox is actively working with the developer community. Furthermore, Roblox is taking up new strategic initiatives such as the Roblox Premium subscription service to enhance retention of paying users and conversion of free users to paying users. Finally, Roblox is working with leading brands (like Warner Bros, NFL, Netflix, Marvel, WWE, and FC Barcelona) to build unique marketing opportunities on the Roblox Platform through branded content.</p></li>\n</ul>\n<p>Hence, Roblox will likely resume robust bookings growth after the projected slowdown in 2021. As you may know, Roblox competes for both users, developers, and creators. Roblox competes to attract and retain its users' attention on the basis of content and user experiences. Therefore, Roblox competes for users and their engagement hours with global technology leaders such as Amazon, Apple, Google, Microsoft, Facebook, and Tencent, global entertainment companies such as Disney, Comcast, and ViacomCBS, global gaming companies such as Electronic Arts, Activision Blizzard, Take-Two, Unity, Valve, and Zynga, online content platforms including Spotify, Netflix, and YouTube, as well as social platforms such as Facebook, Snap, and Pinterest.</p>\n<p>For now, Roblox is out-competing its rivals due to many factors such as personalization of user experience, content variety, and social features. However, Roblox is heavily reliant on developers for the content that leads to the creation and maintenance of user engagement on its platform. Hence, Roblox has to compete with other platforms like Unity to attract and retain developers. Therefore, Roblox has to provide advanced tools needed to build, publish, operate, and monetize content (more efficiently and more lucratively than its rivals).</p>\n<p>Hence, Roblox directly competes for developers, creators, and engineering talent with gaming platforms (such as Epic Games, Unity, and Valve Corporation) that provide developers and creators the ability to create or distribute interactive content. I believe Roblox's comprehensive offering to build, publish, and operate experiences on its platform, free and easy-to-use technology, broad user reach, economic rewards system, brand, reputation for innovation, developer-centric culture, and Roblox's vision differentiates the company from its rivals.</p>\n<p>Now, let's find the fair value and expected returns for Roblox.</p>\n<p><b>Fair Value and Expected Return</b></p>\n<p>Roblox's bookings are the true reflection of its business, and so we will be analyzing the company using its bookings and not its revenue. In this case, the potential free cash flow margin is also based on bookings.</p>\n<p>Assumptions:</p>\n<table>\n <tbody>\n <tr>\n <td><p>Forward 12-month bookings [A]</p></td>\n <td><p>$2000 million</p></td>\n </tr>\n <tr>\n <td><p>Potential Free Cash Flow Margin [B]</p></td>\n <td><p>30%</p></td>\n </tr>\n <tr>\n <td><p>Average fully-diluted shares outstanding [C]</p></td>\n <td><p>~650 million</p></td>\n </tr>\n <tr>\n <td><p>Free cash flow per share [ D = (A * B) / C ]</p></td>\n <td><p>$0.923</p></td>\n </tr>\n <tr>\n <td><p>Free cash flow per share growth rate (conservative estimate)</p></td>\n <td><p>25%</p></td>\n </tr>\n <tr>\n <td><p>Terminal growth rate</p></td>\n <td><p>3%</p></td>\n </tr>\n <tr>\n <td><p>Years of elevated growth</p></td>\n <td><p>10</p></td>\n </tr>\n <tr>\n <td><p>Total years to stimulate</p></td>\n <td><p>100</p></td>\n </tr>\n <tr>\n <td><p>Discount Rate (Our \"Next Best Alternative\")</p></td>\n <td><p>9.8%</p></td>\n </tr>\n </tbody>\n</table>\n<p>Results:</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/9cd75274e4a1451cb432b96e0a8cfafb\" tg-width=\"611\" tg-height=\"734\"><span>Source: L.A. Stevens Valuation Model</span></p>\n<p>According to my estimation, Roblox's fair value is ~$58, i.e., it's trading at a premium of ~20%. In this market, high-growth tech stocks have been hammered, and there are great deals out there. And so buying Roblox at a premium doesn't make a lot of sense.</p>\n<p>To determine the expected returns, our model calculates a projected FCF per share value (year-10) and multiplies it with an assumed Price to FCF multiple (35x here), thereby generating a 2031 price target. Using this price target, the model generates an expected CAGR return for a ten-year investment.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/345f634512883a157361c590884202ee\" tg-width=\"611\" tg-height=\"432\"><span>Source: L.A. Stevens Valuation Model</span></p>\n<p>As you can see above, Roblox's share price could grow from ~$70 to ~$240 (~3.5x) at a CAGR of ~13.15% over the next decade. Since the expected return is lower than BTM's investment hurdle rate of 15%, I rate Robloxa modest buy to hold at $70.</p>\n<p>At such a large market cap, the company will require a few years for growth to catch up with its current valuation.</p>\n<p><b>Concluding Thoughts</b></p>\n<p>Let's conclude our discussion with a BTM Crucial Characteristics Check for Roblox:</p>\n<table>\n <tbody>\n <tr>\n <td><p>Crucial Characteristic</p></td>\n <td><p>Notes</p></td>\n </tr>\n <tr>\n <td><p>Visionary Founder/CEO</p></td>\n <td><p>David Baszucki (co-founder of Roblox) is a visionary technologist who has led Roblox as its CEO since its launch in 2006. Over the last five years, Roblox's popularity has exploded. However, David and his team are aggressively reinvesting in the Roblox platform (especially in engineering) to drive the next leg of growth for the company. Roblox's vision is to become a platform where billions of people share experiences (not just gaming) on a daily basis.</p><p>David is now 58, so we might have his leadership only for a few more years. Furthermore, all other C-suite executives (barring one or two) at Roblox are also well into their 50s. Therefore, I expect significant management changes at Roblox over the next decade. With that being said, I believe the Roblox platform is incredibly powerful, and the company's business model is so robust that even a chimp can run it successfully.</p></td>\n </tr>\n <tr>\n <td><p>Proprietary Tech</p></td>\n <td><p>Roblox's platform (Client, Studio, and Cloud) is powered by highly proprietary technology built over the last three decades. On any given day, more than 32M people use Roblox (DAUs) to connect via play.</p></td>\n </tr>\n <tr>\n <td><p>Network Effects</p></td>\n <td><p>The social component built into Roblox allows users to invite their friends and family to play with them and share experiences on the platform. A higher number of users attracts more developers to Roblox, which leads to more games (better content by variety and quality). These network effects remain the primary driver of Roblox's tremendous growth.</p></td>\n </tr>\n <tr>\n <td><p>Powerful Secular Growth Trend</p></td>\n <td><p>The growth of interactive, real-time 3D content across numerous industries (like Gaming, AR/VR, Architecture, 3D printing/Intelligent Manufacturing, etc.) is a powerful secular growth driver for Roblox.</p></td>\n </tr>\n <tr>\n <td><p>Sounds Financials</p></td>\n <td><p>In 2020, Roblox reported mind-boggling numbers in terms of revenue (~$923M, up ~82% y/y), bookings (~$1.8B, up ~181% y/y), and free cash flow (~$411M). However, the company expects stagnation in bookings in 2021 as the pandemic boost to gaming disappears. Roblox is already a free cash flow generative business, and the company has $800M+ on its balance sheet. Therefore, a direct listing made sense.</p><p>With 650M fully-diluted shares outstanding, Roblox's numbers fall short relative to its market cap. The stock is currently trading at a premium of 20% to its fair value, and its expected CAGR return of 13% falls below our investment hurdle rate.</p></td>\n </tr>\n <tr>\n <td><p>Branding</p></td>\n <td><p>Roblox is a global platform that has 130M Users (32.6M Daily Active Users). The Roblox platform gives individuals a strong sense of community and belonging through the rich, immersive co-experiences it provides. Roblox's growth is entirely organic (word-of-mouth), and this shows how the brand is truly loved by its customers.</p></td>\n </tr>\n <tr>\n <td><p>International Expansion</p></td>\n <td><p>Roblox is available globally; however, it has significant room to expand in underpenetrated geographies such as Europe, Latin America, Africa, and Asia. The joint venture with Tencent to bring Roblox to China will probably be the biggest growth driver for the company within the next few years.</p></td>\n </tr>\n </tbody>\n</table>\n<p>Roblox satisfies almost all of BTM's investment criteria, but at a market cap of $45B+, the valuation looks stretched. We do not shy away from paying a premium for a high-quality business if the expected return exceeds our hurdle rate; however, the expected return for Roblox is only 13% after the massive bounce in its price after going public.</p>\n<p>In recent years, direct listings (like Spotify(NYSE:SPOT)and Slack(NYSE:WORK)) have failed to generate massive performance in their first year as public companies and I expect Roblox to follow suit. The company's guidance for 2021 points to stagnation in bookings as the mobile gaming frenzy of 2020 fades away along with the pandemic. Therefore, I think we can wait for a better entry point on Roblox, which would be around its direct listing price of $45.</p>\n<p>Key Takeaway: I rate Roblox a hold to modest buy at $70.</p>\n<p>Thanks for reading. Please share your thoughts, questions, and/or concerns in the comments section.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Roblox: Building The Metaverse, But For Whom?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRoblox: Building The Metaverse, But For Whom?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-21 15:53 GMT+8 <a href=https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, who are often just average people with little in the way of coding skills, can build games on the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RBLX":"Roblox Corporation"},"source_url":"https://seekingalpha.com/article/4430330-roblox-building-the-metaverse-but-for-whom","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1170860218","content_text":"Summary\n\nRoblox is effectively the YouTube of game development and game consumption.\nGame creators, who are often just average people with little in the way of coding skills, can build games on the platform and sell those games to users of the platform.\nThe platform has something of its own economy, in which Robux are used as currency to purchase games and for micro-purchases within those games.\nHistorically, a very young demographic has found the platform appealing, leading to questions about its ability to evolve upstream and create a true metaverse.\nRoblox has rapidly grown, and in this note, we provide a very deep and comprehensive exploration of the platform. Ultimately, we rate the company a modest buy.\n\nPhoto by Ian Tuttle/Getty Images Entertainment via Getty Images\nInvestment Thesis\nRoblox (RBLX) is a social gaming marketplace platform that connects gamers and developers. Through its global community of 8 million-plus developers, Roblox provides immersive gaming experiences that are shared by millions of gamers. In 2020, mobile gaming platforms like Roblox saw explosive growth in revenue as users flocked to these platforms during coronavirus-enforced lockdowns. A year of bookings stagnation awaits Roblox as demand for mobile gaming normalizes. However, AR/VR is just getting started, and the company has a long growth runway due to the large size of its TAM. Roblox is a free cash flow generation machine, as we will learn in this article, but the current valuation is a little too steep considering the weak guidance for 2021.\nHere's our investment thesis for Roblox:\n\nRoblox is a platform that enables users to enjoy millions of immersive 3D experiences (primarily games). Like YouTube, Roblox's content is user generated. Today, Roblox has more than 32M daily active users and 8M+ developers on its platform.\nRight from its inception in 2006, Roblox has been led by its visionary founder - David Baszucki. His vision for social gaming and shared virtual experiences is the driving force behind the company's admirable success.\nRoblox is a highly profitable business that's growing like a weed at scale. In 2020, Roblox's business was boosted by the coronavirus pandemic as mobile gaming saw exponential growth. However, the rise in mobile gaming is a secular growth trend. Furthermore, AR/VR technology is set to go mainstream over the coming years, which will likely help Roblox drive future revenue growth.\nThe Roblox platform is powered by advanced proprietary technology. Developers create content using Roblox Studio, and consumers (gamers) access this content through Roblox Client (interface to 3D digital worlds). Money is made through the sale of Roblox's virtual currency - Robux, which players use to make in-game purchases.\nFor 2021, Roblox is expecting revenue to grow from $923M to ~$1450M. However, the bookings are projected to rise by just 10% year-over-year (near-stagnation), and free cash flow is set to decline too. The company is well capitalized, and it's already free cash flow generative, so I do not foresee any significant dilutionary events for Roblox.\nDuring the recent correction in high-growth tech stocks, Roblox has surprisingly held on to its IPO bounce. There are many great deals out there in the market right now. However, Roblox is not one of them. The stock is trading at a premium of 20% to its fair value. Since the expected returns for Roblox is less than BTM's investment hurdle rate, I rate it hold at $70.\nRoblox is a great company, which I would buy on dips. At BTM, we will initiate a starter position below $60 (if we get such an opportunity). For now, Roblox is being added to our primary portfolio as a hold.\n\nIn today's article, we will study Roblox's business in detail, analyze its financials, and determine its fair value.\nIntroducing Roblox\nRoblox is a social gaming platform where an average of 37.1 million people from around the world come to play games with friends on a daily basis. While on Roblox, users can play, learn, explore, and communicate in user-generated virtual realities (games with 3D digital worlds) created by Roblox's community of 8M+ game developers. Roblox terms this emerging category as \"human co-experience\", which it considers to be the new form of social interaction (and this idea was envisioned by Roblox way back in 2004).\nThe Roblox platform is powered by user-generated content (like YouTube (GOOG)(NASDAQ:GOOGL)) and draws inspiration from gaming, entertainment, social media, and even toys. This emerging category is also referred to as the metaverse - a term often used to describe the concept of persistent, shared, 3D virtual spaces in a virtual universe. I discussed this concept in a note entitled, \"Introducing President Mark Zuckerberg.\"\nThe idea of a metaverse has been written about by futurists and science fiction authors for over 30 years. With the advent of increasingly powerful consumer computing devices, cloud computing, and high bandwidth internet connections, the concept of the metaverse is materializing.\nThe Roblox human co-experience platform serves as the underlying technology and infrastructure that supports shared experiences for millions of users, and it consists of the Roblox Client, the Roblox Studio, and the Roblox Cloud.\n\nRoblox Client- The application that allows users to explore 3D digital worlds.\nRoblox Studio- The toolset that allows developers and creators to build, publish, and operate 3D experiences and other content accessed with the Roblox Client.\nRoblox Cloud- The services and infrastructure that power the human co-experience platform.\n\nRoblox's mission is to build a human co-experience platform that enables shared experiences among billions of users. Since its inception, Roblox has invested heavily in building the Roblox platform, and ~80% of Roblox's employees are dedicated to maintaining, improving, and expanding the platform. The company is constantly improving the ways in which the Roblox platform supports shared experiences, ranging from how these experiences are built by an engaged community of developers to how they are enjoyed and safely accessed by users across the globe.\nAccording to Roblox's S-1 filing, the Roblox platform is differentiated through a number of key characteristics, which are mentioned below (the following are quoted from the company's S-1 linked just a moment ago):\n\nIdentity:All users have unique identities in the form of avatars that allow them to express themselves as whoever or whatever they want to be. These avatars are portable across experiences.\n\n\nFriends: Users interact with friends, some of whom they know in the real world, and others who they meet on Roblox.\n\n\nImmersive\n:\nThe experiences on Roblox are 3D and immersive. As we continue to improve the Roblox Platform, these experiences will become increasingly engaging and indistinguishable from the real world.\n\n\nAnywhere: Users, developers, and creators on Roblox are from all over the world, including North America, Europe, South America, Asia, Australia, and Africa. In 2019, we entered into a joint venture agreement with Songhua River Investment Limited, or Songhua, an affiliate of Tencent, to operate a Chinese version of the Roblox Platform that will be operated and published in China by Tencent under the name “Luobulesi.” Further, as of December 31, 2020, the Roblox Client operates on iOS, Android, PC, Mac, and Xbox, and supports VR experiences on PC using Oculus Rift and HTC Vive headsets.\n\n\nLow Friction: It is simple to set up an account on Roblox and free for users to enjoy experiences on the platform. Users can quickly traverse between and within experiences either on their own or with their friends. It is also easy for developers to build experiences and then publish them to the Roblox Cloud so that they are then accessible to users on the Roblox Client across all platforms. On behalf of the developers and creators, Roblox also provides critical services such as user acquisition, billing, collections, content moderation, translation, safety, regulatory compliance, and customer support. This makes it easier and simpler for even individual developers and creators and small studios to be successful developers and creators.\n\n\nVariety of Content: Roblox is a vast and expanding universe of developer and creator-built content. As of Dec. 31, 2020, there were over 20 million experiences on Roblox, and in the year ended Dec. 31, 2020, over 13 million of these were experienced by our community. These ranged from experiences that simulate building and operating a theme park to adopting a pet, scuba diving, creating and playing your own superhero, and more. There also are millions of creator-built virtual items, such as hats, shirts, and pants, with which users can personalize their avatars and 3D virtual items, assets, and sounds that creators can incorporate into experiences. Historically, Roblox has also created virtual items with which users can personalize their avatars. Our focus today and going forward, however, is on user-generated content.\n\n\nEconomy: Roblox has a vibrant economy built on a currency called Robux. Users who choose to purchase Robux can spend the currency on experiences and on items for their avatar. Developers and creators earn Robux by building engaging experiences and compelling items that users want to purchase. Roblox enables developers and creators to convert Robux back into real-world currency.\n\n\nSafety: Multiple systems are integrated into the Roblox Platform to promote civility and ensure the safety of our users. These systems are designed to enforce real-world laws and are designed to extend beyond minimum regulatory requirements.\n\nThe revenue growth at Roblox has been driven primarily by significant investments in technology and two mutually reinforcing network effects: content and social.\nSource:Roblox S-1\nRoblox's platform is powered by user-generated content that's built by an engaged community of developers and creators. As Roblox's developers and creators build increasingly high-quality content, more users are attracted to their platform. The more users on the platform, the higher the engagement and the more attractive Roblox becomes to developers and creators. With more users, more Robux (Roblox's virtual currency) is spent on the platform, which in turn incentivizes developers to build more engaging content for users and attracts new developers and content creators to the Roblox developer community.\nThe social nature of Roblox's platform makes it special. Roblox's users typically play with friends, and this inspires them to invite more friends to the platform, who, in turn, invite their friends, driving organic growth. A higher number of friends on the platform leads to increased long-term user engagement. Therefore, more and more users join Roblox's platform through word-of-mouth marketing from their existing friends using the platform.\nNow that we have an understanding of Roblox's platform, let's see how Roblox's economy functions, in other words, how Roblox makes money:\nRoblox is powered by exclusive user-generated games that include personalized avatars. Upon joining Roblox, gamers can personalize their avatars by choosing body types, clothes, and other accessories. To do so, the gamers purchase a virtual currency (Robux) from within Roblox's platform. Game developers and content creators earn Robux through microtransactions in their games, such as selling in-game virtual items and engagement-based rewards. Through Roblox's Developer Exchange Program, developers can exchange Robux for real-world currency. This is how money flows from gamers to developers on Roblox's platform.\nThe income generated through Roblox empowers game developers (individuals and game studios) to invest in higher-quality content, which attracts more gamers to Roblox. Having enjoyed Roblox, users tend to invite more friends to play on the platform, and this helps game developers attract larger audiences. According to Roblox, many users eventually become developers on the platform, and nearly all Roblox developers started as users. Therefore, Roblox has a robust community and a vibrant economy.\nRoblox supports its developer community by providing tools to create, publish, operate, and monetize content (games and experiences). In 2020, more than 1.25M developers earned Robux, and ~4,300 developers qualified for Roblox's Developer Exchange Program, making them eligible to exchange their earned Robux for real-world currency. To qualify for the Developer Exchange Program, the developers need to meet certain conditions, such as:\n\nEarn at least 100,000 Robux,\nVerified developer account, and\nAccount must be in good standing.\n\nIn 2020, more than 3300 developers exchanged Robux for real-world currency. According to Roblox's disclosures, 1,250-plus developers earned more than $10K in 2020, whereas 300-plus developers made more than $100K in the same period.\nGenerally, Roblox users can create an avatar and explore experiences for free after joining the platform. However, the business model for any given game is decided by its developer. Within these free games, users can spend Robux to purchase in-game enhancements and items such as clothing, gear and emotes, from Roblox's Avatar Marketplace. As you may already know, Roblox retains a portion of every Robux transaction and distributes the rest to developers.\nImportant Note: Robux can only be purchased from Roblox at a price set by Roblox and can only be spent within its platform.\nKey Disclosure from Roblox in relation to Robux:\nOther than daily and monthly limitations to prevent fraud, there's no cap on the number of Robux that any user or users in the aggregate can purchase. Robux has no monetary or intrinsic value outside of our platform and can only be converted to US dollars through our Developer Exchange Program. We're aware that some users seek to use unauthorized third-party websites to exchange Robux for real-world currency, which is not permitted under our terms of use. We regularly monitor and screen usage of our platform with the aim of identifying and preventing these activities, as well as regularly send cease-and-desist letters to operators of third-party websites offering fraudulent Robux or digital goods offers.\nSource:Roblox S-1\nGamers primarily purchase Robux in two ways: 1. One-time purchases or 2. Roblox Premium subscription service. Roblox accepts payments through (Apple’s and Google’s) app stores, credit cards, and debit cards. In 2020, the average price for a Robux was $0.01. Roblox Premium is billed monthly, and this subscription service includes discounts on Robux purchases, exclusive access to certain in-experience benefits, some exclusive and discounted marketplace items, and the ability to buy, sell and trade certain Avatar items. In 2020, Roblox’s bookings (sale of Robux) came in at $1.8B, which means that Roblox’s ~140M users spent an average of $12.85 on the platform (the average revenue per daily active users is much higher at about $60).\nFor developers, Robux is considered \"earned\" if and when a developer receives them as payments for a bonafide third-party transaction for virtual goods through the Roblox Platform. Currently, developers can earn Robux via the following mechanisms:\n\nSale of access to experiences (games) and in-game enhancements,\nEngagement-based payouts for the amount of time that Roblox Premium subscribers spend in their experiences,\nSale of content and tools within the developer community, and\nSale of virtual items to gamers through the Avatar Marketplace.\n\nAs Roblox users’ purchase and spend Robux on the platform, developers receive 70% of the Robux spent within their games and 70% of the Robux spent on Roblox's Studio Marketplace items. Content creators receive only 30% of the Robux spent for their Avatar Marketplace items. The earned Robux are deposited into the virtual accounts of the developers and creators, who (if qualified) can convert Robux into U.S. dollars at an exchange rate which is (again) set by Roblox (in its sole discretion) at 1 Robux to $0.0035 (conversion price as of Dec. 31, 2020).\nAs you may remember, the average purchase price of a Robux was $0.01 in 2020, and now we know that developers can exchange a Robux for $0.0035 (35% of Robux’s purchase price). Therefore, the unit economics are undoubtedly tilted in favor of Roblox, and the virtual economy built within Roblox’s ecosystem gives the company massive controlling power.\nIn 2020, Roblox’s qualified developers (Developer Exchange Program) earned $328.7M, up from $112M in 2019. The growth in developer earnings resulted from a growth in qualified developers, a rise in DAUs, and higher engagement with consumers. As an aside, Roblox’s developers do not always cash out their Robux into real-world currency as they can reinvest their Robux into developer tools available in the Studio Marketplace, promote their games through Roblox’s internal ad network, or spend the Robux as any other Roblox gamer would (on experiences and in-game purchases).\nThe Roblox platform combines significant bookings (sale of Robux) (and, by extension, revenue) with strong unit economics to generate massive amounts of free cash flow.\nRoblox Had A Great 2020, But What Next?\nIn 2020, the coronavirus pandemic boosted the mobile gaming industry as people (kids, to be precise) stayed home during lockdowns. Roblox's social gaming platform saw an influx of new users, and bookings shot up to over $2B. As you can see, Roblox's revenues grew by 81% y/y to $923M last year.\nSource:Roblox S-1\nThe rapid revenue growth is attributable to an increase in numbers of active users and higher user engagement (and spending). Roblox's DAUs went up from 19M to 37M within a year, while average bookings per DAU shot up to $17.30 from $12.37. For Q4, total hours engaged came in at 8.4B hours, a figure that represented substantial growth on a y/y basis; however, it also represented a q/q decline.\nSource:Roblox S-1\nAlthough Roblox's operations continue to lose money, the company is actually generating massive amounts of free cash flow. The bookings made on Roblox's platform convert to revenue over time as in-game virtual goods are consumed or amortized (in accordance with the average life of the consumer).\nSource:Roblox S-1\nOn the back of ultra-strong numbers in 2020, Roblox's public listing seems to be timed to perfection. From a reference price of $45, the stock rallied higher on the direct listing day and has continued to trade up at ~$65-80 range. Here's what Roblox's CEO had to say on the listing:\nSource:Roblox CEO David Baszucki on the company's Wall Street debut\nRoblox's growth numbers for 2020 were mind boggling. However, the expectations for 2021 are lukewarm (and rightly so). With the pandemic fading away, people are returning towards normality, and a reduction in hours spent on gaming is a certainty.\nFor 2021, Roblox is expecting DAU growth of just 6%, with flat numbers for hours engaged. Although the company expects revenue to grow by 60% y/y, bookings (closer estimation of Roblox's actual growth) are expected to grow at just 10% y/y.\nSource:Roblox S-1\nAs bookings growth moderates and the company spends more on R&D to drive future growth, the company's free cash flow is set to decline in 2021. Therefore, I would not expect fireworks to continue for Roblox's stock over the coming year as it faces tough comps.\nSource:Roblox S-1\nWith that being said, Roblox's growth story is far from over. In fact, I can envision a very long growth runway for Roblox (similar to Unity). The growth of interactive, real-time 3D content across numerous industries (like Gaming, Architecture, 3D printing/Intelligent Manufacturing, AR/VR, and many more) will drive the demand for Roblox's platform higher over the coming years.\nSource:Newzoo\nIn 2020, mobile gaming was the fastest-growing industry among all forms of gaming, and it's now believed to be worth $77.2B. And by 2025, it's expected to be worth$150B per annum. Naturally, Roblox will benefit from the rapid growth in mobile gaming. Therefore, Roblox is supported by a very powerful secular growth trend, i.e., the rise of mobile gaming.\nHowever, the real upside for Roblox's platform will come from the mainstream adoption of AR/VR technology. These markets are set to see explosive growth over upcoming years:\nSource:DevTeam\nEconomically viable virtual realities are already all around us in that games are massively profitable and are pseudo-virtual realities. I believe that this market will actually accelerate as wide-scale adopted virtual realities begin popping up over the next decade or two, many of which will likely be built atop platforms such as Roblox and Unity.\nAlthough I like Unity, I believe that Roblox's platform has greater potential due to the democratization of content generation. Roblox is transforming the world of interactive gaming by changing how people express themselves, play, socialize, learn, and transact together. According to the management, Roblox is currently focused on the following growth initiatives:\n\nPlatform Extension: Roblox is continually investing to extend its platform. These investments include high fidelity avatars, 3D spatial audio technology, and additional social features. In the future, Roblox can expand into other areas like entertainment, e-learning (education), and enterprise work communications. For example, developers will be able to create and host virtual meetings, classrooms, concerts, and conferences on the Roblox platform.\nAge Demographics Expansion: Today, a large chunk of Roblox’s users are kids below the age of 13. However, platform extension will enable developers to build higher quality experiences (games and other content) that are curated to meet the needs of an older age demographic. If Roblox can successfully increase its penetration among other older age categories, then it can easily grow at swashbuckling rates for years to come.\nInternational Reach: Roblox already is a global platform. However, there's still significant potential for the company to grow in international markets. Today, almost all of Roblox’s revenue comes from the United States, Canada, and United Kingdom. Hence, there are big markets for Roblox to expand its presence. Roblox is expecting the same organic, word-of-mouth user and developer growth in international markets that the platform has experienced in its primary markets. Additionally, Roblox is making massive investments in technology to enhance growth across the globe. For example, features such as built-in regional compliance and automated language translation can enable Roblox to scale operations in global markets, allowing developers to publish games (or content) in multiple languages and allowing users (speaking different languages) to communicate effectively. Roblox’s greatest international opportunity today is China, and the company is addressing this opportunity through a joint venture with Songhua (an affiliate of Tencent, which is one of the leading internet companies in China).\nMonetization: Roblox believes that its platform has massive monetization potential. To improve monetization, Roblox is actively working with the developer community. Furthermore, Roblox is taking up new strategic initiatives such as the Roblox Premium subscription service to enhance retention of paying users and conversion of free users to paying users. Finally, Roblox is working with leading brands (like Warner Bros, NFL, Netflix, Marvel, WWE, and FC Barcelona) to build unique marketing opportunities on the Roblox Platform through branded content.\n\nHence, Roblox will likely resume robust bookings growth after the projected slowdown in 2021. As you may know, Roblox competes for both users, developers, and creators. Roblox competes to attract and retain its users' attention on the basis of content and user experiences. Therefore, Roblox competes for users and their engagement hours with global technology leaders such as Amazon, Apple, Google, Microsoft, Facebook, and Tencent, global entertainment companies such as Disney, Comcast, and ViacomCBS, global gaming companies such as Electronic Arts, Activision Blizzard, Take-Two, Unity, Valve, and Zynga, online content platforms including Spotify, Netflix, and YouTube, as well as social platforms such as Facebook, Snap, and Pinterest.\nFor now, Roblox is out-competing its rivals due to many factors such as personalization of user experience, content variety, and social features. However, Roblox is heavily reliant on developers for the content that leads to the creation and maintenance of user engagement on its platform. Hence, Roblox has to compete with other platforms like Unity to attract and retain developers. Therefore, Roblox has to provide advanced tools needed to build, publish, operate, and monetize content (more efficiently and more lucratively than its rivals).\nHence, Roblox directly competes for developers, creators, and engineering talent with gaming platforms (such as Epic Games, Unity, and Valve Corporation) that provide developers and creators the ability to create or distribute interactive content. I believe Roblox's comprehensive offering to build, publish, and operate experiences on its platform, free and easy-to-use technology, broad user reach, economic rewards system, brand, reputation for innovation, developer-centric culture, and Roblox's vision differentiates the company from its rivals.\nNow, let's find the fair value and expected returns for Roblox.\nFair Value and Expected Return\nRoblox's bookings are the true reflection of its business, and so we will be analyzing the company using its bookings and not its revenue. In this case, the potential free cash flow margin is also based on bookings.\nAssumptions:\n\n\n\nForward 12-month bookings [A]\n$2000 million\n\n\nPotential Free Cash Flow Margin [B]\n30%\n\n\nAverage fully-diluted shares outstanding [C]\n~650 million\n\n\nFree cash flow per share [ D = (A * B) / C ]\n$0.923\n\n\nFree cash flow per share growth rate (conservative estimate)\n25%\n\n\nTerminal growth rate\n3%\n\n\nYears of elevated growth\n10\n\n\nTotal years to stimulate\n100\n\n\nDiscount Rate (Our \"Next Best Alternative\")\n9.8%\n\n\n\nResults:\nSource: L.A. Stevens Valuation Model\nAccording to my estimation, Roblox's fair value is ~$58, i.e., it's trading at a premium of ~20%. In this market, high-growth tech stocks have been hammered, and there are great deals out there. And so buying Roblox at a premium doesn't make a lot of sense.\nTo determine the expected returns, our model calculates a projected FCF per share value (year-10) and multiplies it with an assumed Price to FCF multiple (35x here), thereby generating a 2031 price target. Using this price target, the model generates an expected CAGR return for a ten-year investment.\nSource: L.A. Stevens Valuation Model\nAs you can see above, Roblox's share price could grow from ~$70 to ~$240 (~3.5x) at a CAGR of ~13.15% over the next decade. Since the expected return is lower than BTM's investment hurdle rate of 15%, I rate Robloxa modest buy to hold at $70.\nAt such a large market cap, the company will require a few years for growth to catch up with its current valuation.\nConcluding Thoughts\nLet's conclude our discussion with a BTM Crucial Characteristics Check for Roblox:\n\n\n\nCrucial Characteristic\nNotes\n\n\nVisionary Founder/CEO\nDavid Baszucki (co-founder of Roblox) is a visionary technologist who has led Roblox as its CEO since its launch in 2006. Over the last five years, Roblox's popularity has exploded. However, David and his team are aggressively reinvesting in the Roblox platform (especially in engineering) to drive the next leg of growth for the company. Roblox's vision is to become a platform where billions of people share experiences (not just gaming) on a daily basis.David is now 58, so we might have his leadership only for a few more years. Furthermore, all other C-suite executives (barring one or two) at Roblox are also well into their 50s. Therefore, I expect significant management changes at Roblox over the next decade. With that being said, I believe the Roblox platform is incredibly powerful, and the company's business model is so robust that even a chimp can run it successfully.\n\n\nProprietary Tech\nRoblox's platform (Client, Studio, and Cloud) is powered by highly proprietary technology built over the last three decades. On any given day, more than 32M people use Roblox (DAUs) to connect via play.\n\n\nNetwork Effects\nThe social component built into Roblox allows users to invite their friends and family to play with them and share experiences on the platform. A higher number of users attracts more developers to Roblox, which leads to more games (better content by variety and quality). These network effects remain the primary driver of Roblox's tremendous growth.\n\n\nPowerful Secular Growth Trend\nThe growth of interactive, real-time 3D content across numerous industries (like Gaming, AR/VR, Architecture, 3D printing/Intelligent Manufacturing, etc.) is a powerful secular growth driver for Roblox.\n\n\nSounds Financials\nIn 2020, Roblox reported mind-boggling numbers in terms of revenue (~$923M, up ~82% y/y), bookings (~$1.8B, up ~181% y/y), and free cash flow (~$411M). However, the company expects stagnation in bookings in 2021 as the pandemic boost to gaming disappears. Roblox is already a free cash flow generative business, and the company has $800M+ on its balance sheet. Therefore, a direct listing made sense.With 650M fully-diluted shares outstanding, Roblox's numbers fall short relative to its market cap. The stock is currently trading at a premium of 20% to its fair value, and its expected CAGR return of 13% falls below our investment hurdle rate.\n\n\nBranding\nRoblox is a global platform that has 130M Users (32.6M Daily Active Users). The Roblox platform gives individuals a strong sense of community and belonging through the rich, immersive co-experiences it provides. Roblox's growth is entirely organic (word-of-mouth), and this shows how the brand is truly loved by its customers.\n\n\nInternational Expansion\nRoblox is available globally; however, it has significant room to expand in underpenetrated geographies such as Europe, Latin America, Africa, and Asia. The joint venture with Tencent to bring Roblox to China will probably be the biggest growth driver for the company within the next few years.\n\n\n\nRoblox satisfies almost all of BTM's investment criteria, but at a market cap of $45B+, the valuation looks stretched. We do not shy away from paying a premium for a high-quality business if the expected return exceeds our hurdle rate; however, the expected return for Roblox is only 13% after the massive bounce in its price after going public.\nIn recent years, direct listings (like Spotify(NYSE:SPOT)and Slack(NYSE:WORK)) have failed to generate massive performance in their first year as public companies and I expect Roblox to follow suit. The company's guidance for 2021 points to stagnation in bookings as the mobile gaming frenzy of 2020 fades away along with the pandemic. Therefore, I think we can wait for a better entry point on Roblox, which would be around its direct listing price of $45.\nKey Takeaway: I rate Roblox a hold to modest buy at $70.\nThanks for reading. Please share your thoughts, questions, and/or concerns in the comments section.","news_type":1},"isVote":1,"tweetType":1,"viewCount":435,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":128137736,"gmtCreate":1624505391625,"gmtModify":1703838666680,"author":{"id":"3584091313458616","authorId":"3584091313458616","name":"PP2021","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3584091313458616","authorIdStr":"3584091313458616"},"themes":[],"htmlText":"?","listText":"?","text":"?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/128137736","repostId":"2145156570","repostType":4,"repost":{"id":"2145156570","weMediaInfo":{"introduction":"Reuters.com brings you the latest news from around the world, covering breaking news in markets, business, politics, entertainment and technology","home_visible":1,"media_name":"Reuters","id":"1036604489","head_image":"https://static.tigerbbs.com/443ce19704621c837795676028cec868"},"pubTimestamp":1624489510,"share":"https://ttm.financial/m/news/2145156570?lang=&edition=fundamental","pubTime":"2021-06-24 07:05","market":"us","language":"en","title":"Tesla lifts Nasdaq to record-high close, S&P 500 dips","url":"https://stock-news.laohu8.com/highlight/detail?id=2145156570","media":"Reuters","summary":"June 23 - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.Gains in Nvidia Corp and $Facebook$ Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.Data firm IHS $Markit$ said its flash U.S. manufacturi","content":"<p>June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.</p>\n<p>Gains in Nvidia Corp and <a href=\"https://laohu8.com/S/FB\">Facebook</a> Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.</p>\n<p>Data firm IHS <a href=\"https://laohu8.com/S/MRKT\">Markit</a> said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.</p>\n<p>The \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.</p>\n<p>On Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.</p>\n<p>Powell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.</p>\n<p>\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.</p>\n<p>Eight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .</p>\n<p>Tesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.</p>\n<p>Extending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.</p>\n<p>The Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.</p>\n<p>The Nasdaq Composite climbed 0.13% to 14,271.73.</p>\n<p>The S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.</p>\n<p>Nikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.</p>\n<p>Among so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while <a href=\"https://laohu8.com/S/TRCH\">Torchlight Energy Resources Inc</a> slumped 30%, tumbling for a second day after announcing an upsized stock offering.</p>\n<p>Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.</p>\n<p>The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.</p>\n<p>Volume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla lifts Nasdaq to record-high close, S&P 500 dips</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla lifts Nasdaq to record-high close, S&P 500 dips\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1036604489\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/443ce19704621c837795676028cec868);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Reuters </p>\n<p class=\"h-time\">2021-06-24 07:05</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<p>June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.</p>\n<p>Gains in Nvidia Corp and <a href=\"https://laohu8.com/S/FB\">Facebook</a> Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.</p>\n<p>Data firm IHS <a href=\"https://laohu8.com/S/MRKT\">Markit</a> said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.</p>\n<p>The \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.</p>\n<p>On Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.</p>\n<p>Powell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.</p>\n<p>\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.</p>\n<p>Eight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .</p>\n<p>Tesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.</p>\n<p>Extending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.</p>\n<p>The Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.</p>\n<p>The Nasdaq Composite climbed 0.13% to 14,271.73.</p>\n<p>The S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.</p>\n<p>Nikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.</p>\n<p>Among so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while <a href=\"https://laohu8.com/S/TRCH\">Torchlight Energy Resources Inc</a> slumped 30%, tumbling for a second day after announcing an upsized stock offering.</p>\n<p>Advancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.</p>\n<p>The S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.</p>\n<p>Volume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.</p>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NDAQ":"纳斯达克OMX交易所","UPRO":"三倍做多标普500ETF",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index","TSLA":"特斯拉","INFO":"Harbor PanAgora Dynamic Large Cap Core ETF","NKLA":"Nikola Corporation","IVV":"标普500指数ETF",".DJI":"道琼斯","NVDA":"英伟达"},"is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2145156570","content_text":"June 23 (Reuters) - The Nasdaq climbed to a record-high close on Wednesday, fueled by a rally in Tesla Inc , while the S&P 500 dipped, even as investors cheered data that showed a record peak for U.S. factory activity in June.\nGains in Nvidia Corp and Facebook Inc extended a recent rebound in top-shelf growth stocks that fell out of favor in recent months as investors focused on companies expected to do well as the economy recovers from the pandemic.\nData firm IHS Markit said its flash U.S. manufacturing Purchasing Managers' Index rose to a reading of 62.6 this month, beating estimates of 61.5, but manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices.\nThe \"high level of today's surveys will provide some confirmation for the Fed that the time to begin taking its foot off the accelerator is not far away,\" said Jai Malhi, global market strategist at J.P. Morgan Asset Management.\nOn Tuesday, Fed Chair Jerome Powell reaffirmed the central bank's intent not to raise interest rates too quickly, based only on the fear of coming inflation.\nPowell's comments follow the Fed's projection a week ago of an increase in interest rates as soon as 2023, sooner than anticipated. Since then, growth stocks, including major tech names like Tesla and Nvidia, have mostly rallied and outperformed value stocks, like banks and materials companies.\n\"People are plowing money into what has worked. People are basically momentum-chasing and they're using the last three years of performance to figure out what to chase,\" said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.\nEight of the 11 major S&P sector indexes fell, with utilities down about 1% and leading the way lower, followed by a 0.6% dip in materials .\nTesla jumped 5.3% after the electric vehicle maker said it had opened a solar-powered charging station with on-site power storage in the Tibetan capital Lhasa, its first such facility in China. That trimmed the stock's loss in 2021 to about 7%.\nExtending investors' recent preference for growth stocks, the S&P 500 growth index edged up 0.01%, while the value index dipped 0.24%.\nThe Dow Jones Industrial Average fell 0.21% to end at 33,874.24 points, while the S&P 500 lost 0.11% to 4,241.84.\nThe Nasdaq Composite climbed 0.13% to 14,271.73.\nThe S&P 500 has gained about 13% in 2021, while the Nasdaq and Dow are up about 11%.\nNikola Corp rallied 4.3% after the electric and hydrogen vehicle maker said it is investing $50 million in Wabash Valley Resources LLC to produce clean hydrogen in the U.S. Midwest for its zero-emission trucks.\nAmong so-called meme stocks, software firm Alfi Inc tumbled 26% after more than doubling in value in the prior session, while Torchlight Energy Resources Inc slumped 30%, tumbling for a second day after announcing an upsized stock offering.\nAdvancing issues outnumbered declining ones on the NYSE by a 1.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.\nThe S&P 500 posted 33 new 52-week highs and no new lows; the Nasdaq Composite recorded 91 new highs and 28 new lows.\nVolume on U.S. exchanges was 9.3 billion shares, compared with the 11.1 billion average over the last 20 trading days.","news_type":1},"isVote":1,"tweetType":1,"viewCount":151,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
