Roblox has been generating positive free cash flow consistently—even before the pandemic boosted its business last year. And the valuation looks a bit more reasonable if measured against the company’s bookings, which are projected to exceed $2 billion this year—about 40% ahead of projected revenue.

Roblox’s main challenge might be showing that it can expand beyond its core audience; about two-thirds of its user base is under the age of 14.