Roblox (RBLX – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Doug Creutz from TD Cowen reiterated a Sell rating on the stock and has a $40.00 price target.
Doug Creutz has given his Sell rating due to a combination of factors. Despite Roblox’s Q1 performance exceeding expectations in terms of bookings and adjusted EBITDA, there are uncertainties clouding the outlook for Q2. The disparity between app store and PCU-based models creates a perplexing scenario, making it difficult to predict the company’s future performance accurately.
Creutz notes that while Q1 saw a significant increase in daily active users and bookings, the projections for Q2 are inconsistent. The app store model suggests a moderate continuation of growth, while the PCU-based model indicates a potential for exceptionally high growth. This inconsistency, coupled with the decline in bookings per hour and ABPDAU, leads to a cautious stance, justifying the Sell rating.