Roblox, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Doug Creutz from TD Cowen maintained a Sell rating on the stock and has a $54.00 price target.
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Doug Creutz has given his Sell rating due to a combination of factors impacting Roblox’s financial outlook. Despite raising the price target and estimates for bookings and EBITDA, Creutz expresses concerns over the declining average revenue per daily active user (ARPDAU). This decline is attributed to the influx of users from regions with lower monetization rates, such as the Philippines and Indonesia, which may not sustain the company’s revenue growth.
Additionally, while the user base is expanding, there are indications of market saturation, as suggested by the potential approach of one billion monthly active users. The analyst also highlights the significant stock compensation expenses, which are expected to constitute a large portion of EBITDA, potentially diluting shareholder value. These factors collectively contribute to the Sell rating, despite the positive engagement trends and increased estimates.
Based on the recent corporate insider activity of 243 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of RBLX in relation to earlier this year.