Pixels That Pay, Pixels That Pray
Where profits plug in and premiums log out
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.
Disclaimer:
Ridire Research is an independent content and research publication affiliated with Ridire Capital Management, a private investment adviser. The materials published herein, including explicit labels such as “Buy,” “Sell,” “Hold,” “Long,” or “Short”, are for general informational and educational purposes only. These views represent the author’s opinion based on publicly available information, internal research frameworks, and market analysis at the time of writing. They are not tailored to the specific investment objectives, financial situation, or risk tolerance of any individual investor.Ridire Capital Management, its affiliates, and/or employees may hold, trade, or modify positions, long or short, in the securities mentioned, with no obligation to update disclosures or inform readers of changes. Any trade or allocation referenced should be viewed strictly in the context of a model portfolio and not as a solicitation or offer to buy or sell any security.
While all efforts are made to ensure factual accuracy and analytical rigor, no representation or warranty is made regarding the completeness, accuracy, or reliability of the information provided. Readers are urged to perform their own due diligence or consult with a licensed financial advisor before making any investment decisions. Past performance is not indicative of future results. Investing involves risk, including the risk of loss.