In May of this year, Celsius Holdings reported record revenue of $260 million, which was up 95% from a year earlier and miles ahead of Wall Street consensus forecasts. This makes the brand one of those hypergrowth stocks to buy. The incredible performance has been driven by soaring consumer demand and record earnings. Through five years, the company’s share price has increased a remarkable 2,751%. In the last 12 months, CELH stock has gained 155%. The company that makes drinks to help people accelerate their metabolism and burn body fat has taken off in recent years. But rival Celsius Holdings (NASDAQ: CELH) is no slouch. With Roblox’s growth slowing down, it might not be wise to hold on long enough to find out.In the energy drink market, Monster Beverage (NASDAQ: MNST) tends to get all the attention. If he can’t do that, his voting control means that he will stick around as CEO as long as he wants. That could be great as long as he can manage Roblox so that it exceeds Wall Street’s revenue and earnings growth forecasts while raising guidance each quarter. The Journal reported that a Bernstein investor survey “put a 43% probability on Roblox’s being able to achieve a similar level of market penetration with older age groups.” Too Much Control In CEO’s Handsĥ8 year old cofounder and CEO David Baszucki - who earned an electrical engineering degree from Stanford - controls 70% of Roblox’s voting rights, according to the Journal. Investors doubt Roblox can achieve that much market share among older age groups. That price/sales ratio is over four times more than the “six times forward sales at which Activision Blizzard ATVI, Electronic Arts, Take-Two Interactive TTWO, Zynga ZNGA and the newly public Playtika currently trade,” according to the Wall Street Journal.Ī big part of Roblox’s growth strategy - the realization of which might justify a higher valuation - is to expand beyond its core audience “about two-thirds of which is under the age of 14.” How so? Roblox ended March trading at 25 times the roughly $1.5 billion in revenue it projects for 2021. With slowing growth, it seems particularly difficult to justify Roblox’s lofty valuation. In the first quarter 2021, that time declined 30% to 70 minutes - “consistent with declines in time spent for other popular mobile games,” according to Investor’s Business Daily. daily active user spent 100 minutes a day on Roblox during the peak months of 2020. According to Sensor Tower, the average U.S. People are spending less time on Roblox this year. Doug Clinton, managing partner at investment and research firm Loup Ventures, told the Journal, “I don’t think the growth we’ll see this year will be reflective of the long-term potential of the business.Over the next two or years, bookings could grow by 20% to 30%.” This will mean slower growth for Roblox in the future. As more people receive Covid-19 vaccines, schools will increasingly open up to in-person learning. To its credit, Roblox’s games have helped occupy the time of youngsters who were mostly learning at home last year. Yet there are three concerns that I find troubling - including flaws in these two apparent reasons for optimism. Roblox has a longer-term growth trajectory in mind - expecting to add new groups of customers - older players - from new geographies - particularly those in China - as it updates its technologies to enable its eight million hobbyist game developers to produce higher quality games, according to the Wall Street Journal. Roblox forecasts 2021 revenue growth in the 56% to 64% range while its daily user count is expected to increase 10% to 36.4 million, “helped by attracting users older than its primarily Generation Z base and from regions such as western Europe and East Asia,” notes the Journal. Here are two reasons suggesting Roblox’s prospects are bright:
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