Roblox stock plunges as metaverse gamer's bookings disappoint

Feb. 16, 2022 9:11 AM ETRoblox Corporation (RBLX)By: Rex Crum, SA News Editor83 Comments

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Roblox (NYSE:RBLX) shares hit the skids early Wednesday, falling more than 20% following the metaverse company's fourth-quarter results that failed to meet Wall Street's expectations.

At issue was Roblox (RBLX) saying on Tuesday that it lost $0.25 a share, and had total bookings of $770.1 million, during the final three months of 2021. Analysts, however, had forecast the company to lose $0.07 a share, and total bookings of $772 million.

Roblox (RBLX) said its average daily active users, known as DAUs, reached 49.5 million during the quarter, a 33% gain over the year-ago period. Engagement hours also rose by 28% from a year ago, to 10.8 billion hours.

At Morgan Stanley, analyst Brian Nowak cut his rating on Roblox's (RBLX) stock to equal weight from overweight, and slashed his stock-price target to $65 a share from $115. Nowak said that Roblox's (RBLX) report "speaks to larger than expected reopening headwinds and forward growth uncertainty for the online gaming platform developer.

"In effect, Roblox (RBLX) has not been able to retain [or] grow engagement, bookings or users as well as we hoped through reopening," Nowak said.

Benchmark analyst Mike Hickey, who has a sell rating and $70-a-share price target on Roblox's (RBLX) stock, said the results were disappointing "and could suggest Roblox's core geographies have peaked."

Roblox (RBLX) also gave look into how business is going this year, saying that revenue in January was between $203 million and $206 million, and bookings came in a range of $220 million and $223 million. Stifel analyst Drew Crum said that while those bookings rose from a year ago, the rate of the gain is concerning.

Roblox's (RBLX) January bookings represent an increase of 2% to 3% over a year ago, but are well below December's 21% year-over-year rise, and the 23% annual rise in November's bookings. Crum said the slowdown in bookings suggests tough comparisons "in countries such as the U.S. and the U.K., which generate the majority of the monetization for Roblox, along with reopening headwinds."

Crum holds a buy rating and $110-a-share target price on Roblox's (RBLX).

In addition to its disappointing report, Roblox (RBLX) was also the subject of a BBC report that found the online gamer hosting several sexually explicit games that could be accessed by minors.

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