The issue is that looking forward, growth is likely to slow. I suspect that RBLX’s cash flow generation in part helped the stock reach the insane multiples that it did. Prior to the crash in tech stocks, positive free cash flow was a typically effective catalyst for premium valuations. RBLX coupled that strong top-line growth with solid adjusted EBITDA margin. RBLX closed out 2021 with 83% year over year revenue growth. Is the stock finally a buy here? RBLX Stock Key Metrics I last covered the stock in September when I called the stock grossly overvalued and explained the outlandish assumptions required to justify the stock price. The stock peaked at above $140 per share and recently closed around $35 per share. RBLX went public in early 2021 via direct listing and closed its first day of trading at $69.50 per share. In analyzing the valuation, I explain why in spite of the sizable drop in the stock price, I am still not a buyer here. While some of that decline could be explained from the general volatility seen in the tech sector, the decline could also be explained by certain key metrics. That hype has faded and so has the stock price, as the stock is now down significantly from all time highs.
Roblox ( NYSE: RBLX) was once a heavily hyped stock on the basis of its exposure to the metaverse. Steve Jennings/Getty Images Entertainment
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