The stock has rallied from $21 to $49 in recent months on no news. Here is why I think you should short this move:
$RBLX metrics show flat Daily Active Users q/q, flat revenues and bookings q/q, operating costs will go up, and the kicker is that their shares outstanding DOUBLED in the past 12 months, since they've ramped up hiring this year, its highly likely that the next 12 months could be even more dliutive. Their operating costs will continue to shoot up, and Net Profit for this quarter will come in at approx -$160M. This is supposed to be a growth company, but their revenues and bookings are largely flat q/q and y/y.
MSFT's XBOX, Sony, and Nintendo, and Activision all posted weaker than expected earnings, the gaming sector as a whole has not had a great earnings season and I expect RBLX to be no different.
As consumer savings go down and we enter a recession, parents will give their children less money to spend on virtual goods and games, as consumer discretionary goods tend to be the first to go in these environments.
As well, their attempts to expand into markets like India and China will be extremely costly, they will need to ramp up hiring, specifically on General and Administrative, Sales and Marketing, and their largest expense in Content Moderation.
As well, the strength of the dollar will reduce the value of their bookings and revenues by approx 5% this quarter, data for May showed a 4% headwind from FX and the dollar has only strengthened since then.
(Disclosure, I have position in RBLX consisting of 90% short shares and 10% puts)
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