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Let's talk about the popular Roblox Corporation (NYSE:RBLX). The company's shares received a lot of attention from a substantial price increase on the NYSE over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Roblox’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Roblox
What's The Opportunity In Roblox?
The stock is currently trading at US$63.64 on the share market, which means it is overvalued by 26% compared to our intrinsic value of $50.39. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that Roblox’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Roblox?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Roblox's earnings over the next few years are expected to increase by 30%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in RBLX’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe RBLX should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on RBLX for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for RBLX, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.