Roblox Shares Drop 4.4% on Q1 Miss

Shares of Roblox (NYSE: RBLX) were down 4.4% during extended trading on May 10, after the American video game developer reported a worse-than-feared Q1 loss and failed to meet revenue expectations.

Q1 Miss

The company reported an adjusted loss of $0.27 per share, which fell seven cents short of the street’s estimated loss of $0.20. However, the loss was significantly better than the reported loss of $0.46 per share for the prior-year period.

Meanwhile, revenues jumped 39% year-over-year to $537.1 million but lagged consensus estimates of $657.4 million.

The increase in revenues reflects a surge in average daily active users (DAUs), which increased 28% to 54.1 million, as well as 22% growth in hours engaged. However, bookings declined 3% year-over-year to $631.2 million.

CEO’s Comments

Roblox CEO, David Baszucki, commented, “We remained focused on delivering our innovation roadmap to unlock the full potential of the Roblox platform and drive long-term returns for investors.”

Wall Street’s Take

Ahead of the Q1 miss, Truist analyst Matthew Thornton decreased the price target on Roblox to $36 from $70 but reiterated a Buy rating on the shares.

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on nine Buys, five Holds and one Sell. The average Roblox price target of $51.80 implies 123.37% upside potential to current levels.

Roblox Website Traffic

TipRanks’ Website Traffic Tool provided insight into Roblox’s Q1 performance well ahead of its earnings.

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According to the tool, in Q1, RBLX’s website traffic, showed a decrease in total visits from the previous quarter and from the same quarter for the same period last year.

Roblox Shares Drop 4.4% on Q1 Miss Shares of Roblox (NYSE: RBLX) were down 4.4% during extended trading on May 10, after the American video game developer reported a worse-than-feared Q1 loss and failed to meet revenue expectations. - esenlerbocekilaclama

Bottom Line

Shares of Roblox are down more than 70% over the past year. During the call, the company provided key metrics estimates for April 2022, wherein revenues are expected to grow in the range of 30% to 32% year-over-year with 23% growth in DAUs. However, bookings are expected to decrease in the range of 8% to 10% year-over-year.

Investors, perhaps, will wait to see some positive developments that drive user growth, especially in Roblox’s other businesses, before gaining more confidence in the stock.

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