Roblox Corporation RBLX

Key Assumptions: RBLX has shown strong revenue growth (~26% CAGR over 5 years) with deeply negative operating margins that are gradually improving (from -45% to -25%). WACC is calculated using CAPM with 4.39% risk-free rate, 1.62 beta, and 5.5% ERP yielding ~13.3% base cost of equity; with minimal profitable tax history, near-zero effective tax rate is assumed transitioning to 5% as profitability emerges. The key swing factor is whether RBLX can achieve positive operating margins at scale—bear assumes 10% terminal margins with slower growth, base assumes 15% margins reflecting platform leverage, and bull assumes 20% margins with sustained user monetization improvements. FCF conversion is modeled off improving operating cash flow trends (OCF margin went from ~17% to ~37% of revenue) with capex normalizing around 7% of revenue.