Is It Too Late To Consider Buying Roblox Corporation (NYSE:RBLX)?

Roblox Corp. Class A 0.00%

Roblox Corp. Class A

RBLX

35.90

0.00%

Today we're going to take a look at the well-established Roblox Corporation (NYSE:RBLX). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$46.85 at one point, and dropping to the lows of US$36.20. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Roblox's current trading price of US$38.18 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Roblox’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Roblox

Is Roblox Still Cheap?

Great news for investors – Roblox is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $61.01, but it is currently trading at US$38.18 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Roblox’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will Roblox generate?

earnings-and-revenue-growth
NYSE:RBLX Earnings and Revenue Growth March 30th 2024

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -12% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Roblox. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although RBLX is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to RBLX, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping tabs on RBLX for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Roblox, you'd also look into what risks it is currently facing. Case in point: We've spotted 4 warning signs for Roblox you should be mindful of and 1 of these is concerning.

If you are no longer interested in Roblox, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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