After reporting $1.2 billion in losses in 2023, more than $900 million in each of 2022 and 2024, and an estimated $1.1 billion in 2025, you wouldn't think I'd be suggesting that buying Roblox (RBLX 2.53%) stock is a great way to secure an early retirement.
And yet I am. And it is.
Image source: Roblox.
Valued at a market capitalization of more than $52 billion, Roblox has grown into one of the biggest video game stocks on the planet, edging out Electronic Arts by $1 billion, and Take-Two Interactive by $7.5 billion. It's not as big as Sony or Microsoft, granted, but both those companies run substantial businesses beyond video games.
Roblox is also arguably the future of video games. As gamers increasingly migrate away from console games sold on CD-ROM for $50 a pop, and toward free-to-play or "freemium" games played entirely online, Roblox decided to set up shop, building a platform for gaming and inviting its own players to build the games they'll play there.
When players buy Robux virtual currency to spend in a game on the Roblox gaming platform, Roblox makes money. When players build games for others to play on Roblox, Roblox sells the other players even more Robux to spend in those games (giving a cut to the game-builders). And when advertisers, attracted by the market of gamers on Roblox, want to advertise there, Roblox is happy to take their money as well.
NYSE: RBLX
Key Data Points
All these revenue streams added up to $4.5 billion in sales for Roblox over the last year. And while the company isn't yet reporting a profit, it did generate $1.2 billion in free cash flow over the period -- and has been FCF-positive in four of the past five years.
Sounds like a pretty great business to me, and I think it could set investors up for an early retirement.
