Model Portfolio Actions:
Short RBLX -1% weight
Long 7974 JP (NTDOY) +0.5% weight
Long CDR PW +0.5% weight.
Long PDX SS +0.5% weight.
Long SKLZ +0.5% weight.
Why Bring the Roblox Short Back?
Growth veneer hides mix risk. Q1 bookings +31 % YoY leaned on India & Japan DAUs (up 77 % / 48 %), markets with lower ARPU and higher FX noise. Monetization of the 13+ cohort still unproven.
Structural cost drag. DevEx payouts hit $281 m (27% of revenue); Trust & Safety ≈13 % of revenue. Operating leverage remains elusive.
Premium multiple with tightening narrative. ~5× NTM bookings still prices in “platform” status just as cost creep, demographic fragility and ad-product delays bite.
Previous RBLX article:
Why These Four Longs
Nintendo (7974 JP) – The recent Switch 2 launch, paired with blockbuster first-party titles such as Mario Kart World and Zelda remasters, gives Nintendo a hard, date-certain catalyst that most peers, Roblox included, lack. Management sits on ¥1.41 trillion in cash and equivalents, providing ample dry powder for marketing or share buy-backs while keeping balance-sheet risk near-zero. A fresh hardware cycle, layered on timeless IP, creates visible top-line acceleration just as Roblox faces tougher comps and heavier cost creep.
CD Projekt (CDR PW) – A week after the Switch 2 arrives, Cyberpunk 2077: Ultimate ships as a day-one title, and its expansion Phantom Liberty has already cleared 10 million units sold. The company converted that momentum into a 38% net margin in Q1-25 and now holds PLN 1.49 billion in cash, giving it one of the cleanest sheets in gaming. This franchise fly-wheel and net-cash fortress stand in stark contrast to Roblox’s dilution-funded capex and still-unproven ad engine.
Paradox Interactive (PDX SS) – Paradox’s evergreen DLC model keeps revenue climbing even in “quiet” quarters, and with 97% of sales earned outside Sweden, currency diversification smooths macro shocks. The publisher’s PC strategy titles monetize over years rather than months. Because its core audience skews older, PC-centric and global, Paradox’s cash flows are largely uncorrelated with Roblox’s youth-mobile sandbox exposure.
Skillz (SKLZ) – In turnaround mode, Skillz just reported paying MAUs up 12 % QoQ to 123 k while trimming cash burn; the firm still has $254 million on hand to fund new real-money esports formats. At only 0.5 % of gross exposure for us, it is a cheap call option on a high-volatility catalyst set that could re-rate sharply if the user-generated game slate gains traction, offering asymmetric upside against Roblox’s already premium multiple.
Together, these four names give us a cash-rich, catalyst-rich long sleeve whose fundamentals are either counter-cyclical or orthogonal to the structural risks we see in Roblox.
Conclusion
Roblox still trades on a promise of ageing-up monetization and ad rollout, yet cash costs rise faster than narrative levers mature. By pairing a modest –1% RBLX short with a 2% gross sleeve of content-rich, cash-flush publishers, we stay exposed to tangible upside catalysts while betting that platform hype can’t outrun hard fundamentals.
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