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.

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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.

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.

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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