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Online game creation system Roblox recently reported that its shares closed substantially lower following a weak November report update.
Roblox Corp (NYSE: RBLX) saw its shares fall by more than 15% on Thursday’s close, following a disappointing November update. The company’s November business update, which showed slowing growth, suffered a negative impact from the strong effects of the US dollar. According to reports, Roblox’s booking growth, or revenue, declined 4-5% year-over-year (YoY), with bookings per daily active user also falling 9% from last year.
Roblox Shares Down 73% Year-to-Date amid November Update
The Roblox shares November update comes amid a broader slump within the video game space. In addition, shares of the online game platform are currently down a massive 73% since the beginning of the year.
Roblox reported its estimated bookings for November as between $222 million and $225 million. Although this figure represents an increase of 5% to 7% YoY, the rate still pales compared to last year’s 22% to 24% increase. According to the online game platform, the strength of the US dollar against the British pound and euro impacted its business.
Roblox’s average bookings per daily active user came in at between $3.92 and $3.97, which is down 7% to 9% from last year. Furthermore, even though daily active users grew 15% from November 2021 to 56.7 million presently, the game creation system reported 35% growth previously.
Video Game Industry in The Lurch
The video game industry continues to suffer broader weakness characterized by declining sales and buyer apathy. In addition, macroeconomic constraints like higher interest rates and a tepid tech space also weigh heavily on the gaming industry.
Last month, prominent video game holding company Take-Two Interactive slashed its outlook for the current quarter and fiscal 2023. According to the ‘Grand Theft Auto’ enabler, the current macroeconomic conditions were to blame for its projected contraction in operations.
In a statement issued in early November, Take-Two chief executive officer Strauss Zelnick explained:
“Our reduced forecast reflects shifts in our pipeline, fluctuations in FX rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile.”
At the time, shares of the Rockstar Games and 2K owner tumbled more than 15% on the underwhelming guidance.
Apple (NASDAQ: AAPL) also previously warned of a decline in digital advertising and gaming in its Q4 earnings report. At the time, the tech giant’s chief financial officer Luca Maestri explained during the earnings call:
“Specifically on Services, we expect to grow, but to be impacted by the macroeconomic environment, increasingly affecting foreign exchange, digital advertising, and gaming.”
Apple beat expectations for its latest quarterly result.
Created by Erik Cassel and David Baszucki in 2004 and released in 2006, Roblox is free-to-play. However, the gaming platform also supports additional microtransactions, with in-game purchases available through its Robux virtual currency.
Roblox started out as a relatively small platform but began to expand rapidly in the latter half of the 2010s. This growth trajectory peaked during the Covid pandemic, with tens of millions of people across the globe connecting with friends. By August 2020, Roblux had more than 164 million monthly active users.