Roblox: Gaming Platform, May Evolve Into “Metaverse Operating System”

Max Hu of ZZ Capital international presented his investment thesis on Roblox (US: RBLX) at Asian Investing Summit 2022. Max also discussed his high-level thesis on investment in the “metaverse” sector.

Thesis summary:

Roblox runs the well-known online game platform and game creation system Roblox. It allows users to program games and play games created by other users.

The company was co-founded by David Baszucki and Erik Cassel in 2004. They envisioned that player-created virtual worlds (rephrased today as “metaverse”) would become social networks and a key part of our life. Roblox has been pioneering metaverse technology and has changed a generation of young people’s perception of virtual worlds.

While the U.S. remains the company’s single-largest revenue generator, Asia has quickly become its fastest growth driver. There is also reason to believe that its partnership with Tencent in the Chinese market will bear fruit over time.

The recent sell-off in high-growth stocks, including Roblox, provides an attractive entry point for investors with a long-term investment horizon. The company recently had a market cap of $28 billion, implying a 2022E P/S ratio of 8x and a 2023E FCF yield of 3%.

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About the instructor:

Max Hu serves as the executive director for ZZ Capital international. ZZ Capital International is the Hong Kong-based oversea investing platform for the ZEG, a leading Chinese privately-owned investment group with an AUM over 150 billion USD.

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