RBLX is uninvestable due to persistent operating losses and excessive stock-based compensation dilution ($4B over 5 years, ~20% of market cap).

Roblox. Let's take a look. Uh, nice revenue. Okay. Revenue growing 35% year-over-year. Margins are growing. Profit gross profit margin last couple years. It's moved up. It looks like it was flat early on or it's kind of returned to this 23. That seems low for a software company. 23%.

What is their cost of revenue? Is that many developers? That seems R&D. Oh my god. 1.5 billion of R&D. Look at this R&D expense. Come on, guys. Plus selling marketing. There's your admin.

They probably have a good slug of stockbased comp.

And then what did they what they make? income in the this is operating income is not supposed to be upside down like this. Income should be positive. They have never made positive operating income in their history.

They have almost five billion in revenue and they can't make a single dollar in profit. Why is it that is it that hard? You're bringing $5 billion dollar in the front door and to do that it cost you six.

Let's take a look at cash flow. Anybody want to take a guess? Let's do this. Let's take throw throw guesses in the comments right now on what their stockbased comp is one five billion of topline revenue.

And I haven't looked at this. We've got corporate expenses 580 million. Throw me a guess in the comments for what you think stockbased comp is and we'll take a look. I'm guessing it's a I'm guessing 80 million and I don't know haven't looked at could be totally wrong.

We'll see. 800 million. All right, dude. Let's go. I mean, if you've worked there, like, if you can do it, if you you have the chops to go into the board and say, "I'd like $800 million of comp, please."

And they're like, "Oh, oh, yeah, okay. Sign me up. 145 million. There you go. 80 million." Guesses are rolling in. All right. Let's see. Let's see what we got. Cash flow statement stock bit [laughter] 1.1 billion.

I'm sorry. I'm not I'm not sharing my screen. I'm sorry. This whole time I'm I'm talking right there. Stockbased comp 1129. Oh my god. H how is that? That's that's offensively large.

So let me get this straight. Let's go back to the P&L because I apparently I wasn't sharing all this time. So revenue looks good, right? Okay. Growing top line, they make just under five billion in revenue.

Okay, fine. gross profit making money. Not bad. Here, here's your R&D expense. Really, really large. 1.5 billion. That that's that's rough. Um, how do they even R&D? Oh, I I think I know what.

So, what I'm what I'm reacting is how where do they even hide this money? So normally normally um stockbased comp goes to the employees. Most the employees go to sit in selling they sit in general administrative expenses.

Their GNA is 580 million total expense. Where do you hide 1.1 billion in costs if your GNA is only 580? That's why the COGS is so high. They take their employees and they say, "Hey, you write code software.

You're part of my revenue generation machine. I'm going to push you into cost of goods sold." That means this cost of goods sold number is 1 point is 3.7 billion. So this isn't like you know normally think COGS you think like um you know factory workers or people who are making the units that are consumed when you sell the product.

But if you say your product is software and I'm speculating here, you can and and these people are constantly generating software that's used to make revenue, you can move them up there.

That's a bigger number. Now, one 3.7 billion, that's easier to hide 1.1 billion of stockbased comp overall expense bucket like COGS is. That's where they buried it. And you can see right here between I can't move my mouse to point but you can see these two large um on the on the right hand side the two most recent periods that large negative on the right the gap between that one and the one previous that goes from 2.6 billion negative to 3.7 billion negative.

That delta is 1.1 billion. And that delta lines up very well with this with this this stockbased comp $1.129 billion. That is offensively large.

Like let's look at how much they've so what is bring up a calculator. Let's look at all their stockbased comp in the last five years. 1129 + 1015 + 868 + 589 + 341. That's last 5 years. $4 billion in stockbased comp was paid out in the last five years from 2021 to 2025. um $4 billion that is almost one year's entire revenue was given away to the employees as part of uh on top of their salary, on top of cash bonuses, on top of health care and benefits.

I'm sure their offices are lavish or maybe these guys work remote. I'm sure they get snacks and maybe unlimited paid vacation. like is anybody showing up to work like like that?

So, no, I I I I'm not a fan of this of this company that is uh that is that is just fleecing shareholders of their money.

Let's take a look at the at the at the stock performance. What's the market cap currently? uh market cap 26 billion. So 26 billion they've given away what's that 20%. 4 billion in stock against 26 billion.

Yeah. 20 20% of the current market cap has been given to the employees as comp uh and their stock if you look at this uh five-year chart stock is flat. What are the equity owners getting out of this company?

If everything they do is just print shares and hand them to the employees. The employees cash them out. They're making money. You are not. This is not a company you want to buy.

That is that is a that I think that should be legal action there. There's there's something so egregious about that. Something so disingenuous uh to the stock owners to say, "Hey, don't worry.

We're going to grow." Um like I'm sure if you looked at the investor presentations in this past couple years, it probably said, "Hey, buy our stocks. We're going to go revenue.

We're going to go earnings." Blah blah blah blah. And what does the stock do? Nothing. Why? because they're they're funneling it out the back door to themselves. Yeah. Yeah. It's it's a miscarriage of justice.