By
staff writer
March 26th, 2024
Online gaming giant Roblox had a feeble Q4 report which resulted in the worst day ever performance of its stock.
Roblox Corp (NYSE: RBLX) stock logged its worst day ever on Wednesday February 16th after it closed down by more than 26%. The gaming company had reported earnings for the fourth quarter on Tuesday evening, which fell below expectations.
Roblox’s revenue (bookings) for the period came in at $770 million, versus the general consensus estimate of $772 million, according to Refinitiv. Meanwhile, its revenue of $568 million was also some way off the $604 million expected by analysts. In addition, the online game platform saw its shares plummet about 20% to $58 in pre-market trading. Furthermore, the gaming giant’s loss of 25 cents per share exceeded Wall Street’s 13 cents anticipation. Roblox stock began to drop after Tuesday’s bell, and continued to slide on Wednesday. RBLX eventually closed at $53.87 – a 52-week low. Additionally, as it stands, the company’s stock is now also below its $64.50 direct listing price from March 2021.
However, it was not all doom and gloom for Roblox. The metaverse player also reported 49.5 million daily active users during the fourth quarter, which represents an increment of 33% YoY. Although, it is also worth noting that this figure still barely missed analysts’ expectations of 50.1 million.
Analysts Weigh in Roblox Predicament
Analysts expressed concerns in the slowdown of Roblox bookings as well as its outlook. In a note on Tuesday evening, Stifel analysts said:
“Our key takeaway from Roblox’s 4Q update … January 22′ bookings experienced a deceleration relative to past months, up just 2%-3%, YoY as compared to October, November, December ’21 at +15%, +23%, +21%, respectively, for example.”
The note questioned Robox’s resignation to a less-than-stellar period of bookings comps for the first quarter of the year. It read that “…the company indicated YoY bookings comps, ‘should improve starting in the May-June time frame,’ leaving us to ponder what this suggests for February-April. Why the anticipated slowdown?”
In a letter to its shareholders, Roblox also admitted a declining earnings growth rate.
CEO Gives Explanation for Company Stock’s Worst Day Performance
In a media session, Roblox chief executive officer David Baszucki weighed in on the gaming platform’s earnings miss. Baszucki suggested that Roblox had several avenues to beef up its revenue stream, but prioritized user experience. As he put it:
“We have so many opportunities to increase monetization on our platform, we’re not touching advertising, we’re not touching 3D immersive shopping. We’re being very gentle on monetization relative to quality user growth, creating a safe and civil platform and driving our DAU numbers. So, we are focused on user and engagement growth.”
Roblox is an online open gaming platform and game creation system developed by Roblox Corporation. Players get to create their own interactive worlds whereupon they can interface and play with others over the internet. As of August 2020, an estimated 50% of all children under the age of 16 years in the US played Roblox.
Roblox was also the first major company working on the metaverse to go public, The company recently partnered with companies such as Nike (NYSE: NKE) and the NFL.
Roblox sells virtual currencies that players can use to purchase in-game digital items.