- RBLX
-1.81% - NVDA
-2.34%
The best reason to consider buying Roblox (NYSE: RBLX) stock before its second-quarter earnings report on July 30 is the rapid growth in its higher monetizing over-18 cohort. Winning over older users to the gaming platform is key to management’s long-term strategy to capture 10% of the global gaming content market.
As the company made clear in its Q1 shareholder letter: “We are aggressively moving to capture the untapped opportunity to expand our [over 18] user base, the largest segment of the traditional gaming market.”
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Over-18 users accounted for a quarter of daily active users in the first quarter, and that share is growing rapidly. The 18-34 cohort grew 50% year over year last quarter. This is very bullish for Roblox, because over-18 players monetize at rates more than 50% higher than under-18 players.
The stock has collapsed this year, but it is largely due to temporary headwinds. Players are now required to verify their age before communicating with other players on the platform. This is necessary for player safety and the long-term health of the platform. But it has pressured near-term engagement, prompting management to lower its full-year bookings guidance (a non-GAAP revenue measure). Bookings are expected to increase between 8% to 12% in 2026.
Nothing has changed Roblox’s opportunity. In the long term, an older player base could lead to higher-quality games on the platform, studio partnerships, and graphical upgrades. This would help Roblox achieve its goal of capturing 10% of the gaming content market.
It’s impossible to predict how the stock will perform after the earnings report, but from a long-term perspective, it seems an attractive buy. It has already fallen 68% from its previous peak and is trading at a reasonable 22 times trailing free cash flow. If there’s one reason to be confident in Roblox’s long-term growth trajectory, it’s the momentum in its highest-monetizing cohort.
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