Cathie Wood’s Stock Portfolio: 2025 Stock Picks

4. Roblox Corporation (NYSE:RBLX)

ARK Investment Management’s Q3 Stake Value: $524.1 million

Number of Hedge Fund Holders: 52

Roblox Corporation (NYSE:RBLX) is a video game developer located in California, USA. With 88.9 million active users each day, 2.9 million developers, and 6 million active experiences, Roblox Corporation (NYSE:RBLX) goes beyond the standard definition of a video game by combining its digital currency and providing a wide range of unique virtual experiences.

On January 28, Piper Sandler increased its price target for Roblox Corporation (NYSE:RBLX) to $72 from $65 due to strong user engagement and bookings momentum ahead of the company’s results. Bookings are expected to be $1.41 billion in the fourth quarter, up 25% year on year and approximately 3% higher than Wall Street projections, despite management’s 20% growth guidance, which it considers unduly conservative. The firm also upgraded its full-year 2025 bookings and EBITDA projections by 1.4% and 6.3%, respectively, noting strong momentum and a predicted 1Q25 bookings range of $1.12 billion to $1.15 billion.

Roblox Corporation (NYSE:RBLX) announced impressive Q3 results on October 31, 2024. Revenue was $919 million, up 29% from the previous year and above the $860 million to $885 million projection set at the end of Q2. In addition, virtual currency sales were estimated to have reached $1.13 billion, above predictions of $1 billion to $1.025 billion.

SaltLight Capital stated the following regarding Roblox Corporation (NYSE:RBLX) in its Q3 2024 investor letter:

“Roblox Corporation (NYSE:RBLX) has firmly established itself as the dominant player in user-generated gaming within Western markets. Meanwhile, Tencent has developed a similar ecosystem in China with its WeChat Mini-games platform. Owning both gives us a unique vantage point to assess the evolving landscape of user-generated gaming platforms globally.

At its recent investor day, Roblox set an ambitious target of reaching 10% of gaming content revenue, of which it estimates the total pool is around $180bn (for context, in the last twelve months, it made $4bn in bookings).

We think this will be a challenging target, but it will be positive for the business directionally. The reason is that Roblox has spent the last three years heavily investing in re-engineering its game platform to be high fidelity, performant and widely available across platforms. They also share economics with their creators to the point now that the absolute numbers in highly engaged games are enough to support a small game studio. The result is that the quality of games has materially improved, attracting additional engagement – particularly from older users…” (Click here to read the full text)