Three Stocks to Buy in 2025: Roblox, MercadoLibre, and Taiwan Semiconductor Manufacturing

Roblox's Q2 earnings show a 21% YoY revenue increase to $1.1 billion, with daily active users and hours engaged rising by 41% and 58%, respectively. MercadoLibre's synergies and leadership in Latin America should continue to drive its stock. Taiwan Semiconductor Manufacturing's strong momentum isn't likely to slow anytime soon.

Roblox's Q2 earnings report, released on July 2, 2025, showcased robust user growth and engagement, while profitability continues to elude the metaverse gaming platform. The company reported a 21% year-over-year (YoY) increase in revenue to $1.1 billion, with daily active users (DAUs) and hours engaged rising by 41% and 58%, respectively [1]. This surge in user activity reflects the platform's enduring appeal among younger demographics.

Despite the impressive top-line metrics, Roblox remains unprofitable. The company recorded a net loss of $278.4 million in Q2, contributing to a total net loss of $493.5 million for the first half of the year. Roblox's forward-looking guidance expects net losses to continue into 2025, with estimates ranging between $1.20 billion and $1.26 billion [1].

The company's bookings metric, which reflects actual cash coming in from user spending on the platform, showed a 51% YoY increase to $1.4 billion in Q2. This growth in bookings helped boost free cash flow to $177 million, up 58% YoY. However, the company's high valuation, currently trading at nearly 14.7 times its forward sales estimates, is a significant concern for investors [1].

Roblox's user growth and engagement are picking up steam, with DAUs surging to 111.8 million in Q2, up 41% YoY. The platform's hours engaged climbed to 27.4 billion hours, nearly 10 billion more hours than in Q1 2024. This increase in user activity presents more opportunities for Roblox to generate revenue through Robux purchases, sponsored content, and advertisements [1].

The company's strong user growth and engagement are not without challenges. Roblox continues to prioritize reinvestment in its creator ecosystem, spending a record $316 million on DevEx payouts during Q2. This commitment to sharing revenues with creators further delays the path to profitability. Additionally, increased competition from games like Fortnite and Minecraft poses a threat to Roblox's market share [2].

Investors should closely monitor Roblox's ability to maintain its current momentum and translate user engagement into sustainable profitability. The company's high valuation, while justified by its growth prospects, remains a significant risk. Roblox would need to maintain at least 40% to 50% bookings growth over the next several years to justify its valuation [1].

Roblox's Q2 earnings report highlights the company's strong user growth and engagement, but profitability remains a challenge. Investors should continue to monitor the company's ability to monetize its platform and maintain its current momentum in the face of increased competition.

References:
[1] https://www.fool.com/investing/2025/08/06/2-green-flags-for-roblox-stock-and-1-red-flag-to-w/
[2] https://www.nasdaq.com/articles/robloxs-bottom-line-still-red-when-will-profitability-arrive