Should You Invest in Roblox Corporation Amid Share Price Surge?

The article discusses the stock performance of Roblox Corporation (NYSE:RBLX) and whether it is still a good investment opportunity. The company's shares have seen a significant price rise of 91% in the past two months, but the stock is still trading below its yearly highs. According to the valuation model, the stock seems fairly valued at the moment, with a 7.83% premium to its intrinsic value. The company's future outlook is also optimistic, with expected earnings growth of 73% over the next few years. However, investors should consider other factors such as the company's financial strength before making a decision.

Roblox Corporation (NYSE: RBLX) has experienced a significant price rise of 91% over the past two months, reaching its current trading price of $125.16. Despite this surge, the stock remains below its yearly high of $150.59. The company's valuation model suggests that the stock is currently fairly valued, with a 7.83% premium to its intrinsic value. This positive valuation is supported by the company's optimistic future outlook, with expected earnings growth of 73% over the next few years.

Roblox Corporation operates a human co-experience platform that allows users to interact, explore, and develop 3D experiences. The platform has seen a resurgence in user engagement, with daily active users (DAUs) increasing by 41% year over year (YOY) to 111.8 million in the second quarter (Q2) of 2025. This growth in user engagement has translated into increased bookings, with Roblox's bookings reaching $1.44 billion in Q2, up 51% YOY. This growth in bookings has boosted the company's free cash flow to $177 million, up 58% YOY [2].

However, Roblox Corporation remains unprofitable, with net losses of $278.4 million in Q2, bringing the total net losses in the first half of the year to $493.5 million. The company forecasts net losses for the year to be between $1.20 billion and $1.26 billion. Despite this, the stock is trading at nearly 14.7 times its forward sales estimates, indicating a high valuation for an unprofitable company [2].

Investors should consider several factors before making a decision to invest in Roblox Corporation. The company's high valuation and lack of profitability are significant concerns. However, the company's strong user growth and engagement, as well as its robust bookings growth, suggest that it has the potential to become profitable in the future. Additionally, the company's high institutional ownership, with institutional investors holding 94.46% of the stock, indicates strong confidence in the company's prospects [3].

In conclusion, Roblox Corporation's stock performance has been strong over the past two months, with a significant price rise and a current valuation that appears to be fairly valued. However, investors should consider the company's high valuation, lack of profitability, and increased competition before making a decision to invest.

References:
[1] https://www.cnbc.com/quotes/RBLX
[2] https://www.theglobeandmail.com/investing/markets/stocks/RBLX/pressreleases/33913870/2-green-flags-for-roblox-stock-and-1-red-flag-to-watch/
[3] https://www.marketbeat.com/instant-alerts/filing-roblox-corporation-nyserblx-stock-position-lifted-by-r-squared-ltd-2025-08-03/