We recently published a list of Top 10 Stocks to Buy According to 12 West Capital Management. In this article, we are going to take a look at where Roblox Corporation (NYSE:RBLX) stands against other top stocks to buy according to 12 West Capital Management.

Joel Ramin founded 12 West Capital Management in August 2011, establishing it as a New York-based hedge fund specializing in global investments across equities, equity-related instruments, and credit securities. Prior to launching 12 West, Ramin worked as an analyst at Bridger Capital, gaining experience in both long equity positions and short-selling strategies. Currently, he serves as the firm’s Managing Member and Portfolio Manager, overseeing investment decisions and advisory services for institutional investors in the United States.

12 West Capital Management focuses on providing tailored investment management solutions, leveraging a research-driven approach to identify opportunities across various markets. The firm actively engages in both long-term and short-term investments, aiming to maximize returns through strategic asset allocation and risk management. Its expertise spans multiple asset classes, allowing it to adapt to changing market conditions while delivering value to its clients.

Joel Ramin holds a degree from the McIntire School of Commerce, where he completed his undergraduate studies in finance in 2000. His background in finance and investment, combined with his experience at Bridger Capital, has shaped his approach to portfolio management at 12 West Capital. Under his leadership, the firm has built a reputation for its disciplined investment strategies and commitment to generating long-term growth for its investors.

According to its most recent 13F filing for the fourth quarter of 2024, 12 West Capital Management reported nearly $954.6 million in managed 13F securities, with its top 10 holdings accounting for a hefty 90.75% of its portfolio.

Our Methodology

The stocks discussed below were picked from 12 West Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Roblox Corporation (NYSE:RBLX)

Number of Hedge Fund Holders as of Q4: 61

12 West Capital Management’s Equity Stake: $119.31 Million 

Roblox Corporation (NYSE:RBLX), established in 2006 and based in San Mateo, California, has been a significant presence in the gaming industry, though it only recently gained widespread recognition. This rise in popularity led to a substantial increase in valuation, from $2.5 billion in 2018 to nearly $38 billion when it debuted on the New York Stock Exchange in 2021. In 2024, the company reported revenue of $3.6 billion, reflecting a 28.7% year-over-year increase. Additionally, it distributed $923 million to creators, reinforcing its commitment to user-generated content and the expansion of its virtual economy.

CEO David Baszucki emphasized the company’s focus on innovation and fostering connections within its digital ecosystem. He outlined Roblox Corporation (NYSE:RBLX)’s ambition to capture 10% of the global gaming content market while continuing investments in its virtual economy, AI-driven discovery, and platform security. Full-year revenue and bookings increased by 29% and 24%, respectively, underscoring the scalability and efficiency of Roblox’s business model.

Roblox Corporation (NYSE:RBLX) demonstrated strong financial growth in 2024, achieving $3.6 billion in revenue and $4.37 billion in bookings, reflecting 29% and 24% year-over-year increases respectively. Adjusted EBITDA reached $180.2 million while operating cash flow surged 79% to $822.3 million. Free cash flow also saw substantial growth, reaching $641.3 million, highlighting the company’s ability to generate liquidity while investing in expansion.

For 2025, Roblox Corporation (NYSE:RBLX) projects continued financial momentum, expecting full-year revenue between $4.25 billion and $4.35 billion, with bookings anticipated to range from $5.2 billion to $5.3 billion. The company forecasts a consolidated net loss between $995 million and $1.07 billion and an adjusted EBITDA between $190 million and $265 million. Operating cash flow is expected to fall between $1.05 billion and $1.11 billion, while free cash flow is projected to range from $800 million to $860 million. With strategic investments in technology, content development, and monetization, Roblox remains well-positioned for sustained long-term growth.

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)

Overall, RBLX ranks 3rd on our list of top stocks to buy according to 12 West Capital Management. While we acknowledge the potential for RBLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RBLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.