Roblox Drops 22% Today, Is It A Buy?
πππOn a day when the markets are up, $Roblox Corporation(RBLX)$
Roblox said that it lowered its full year bookings guidance to between USD 4 billion and USD 4.14 billion, down from USD 4.14 billion to USD 4.28 billion. Roblox cited a tough comparison with 2023, when its platform launched on Sony Group's PlayStation consoles.
For the current quarter Roblox projected bookings in the range of USD 870 million to USD 900 million. Analysts were expecting USD 929 million in bookings. Roblox also said it expects a quarterly net loss of USD 265 million to USD 267 million.
Roblox's shares closed today at its lowest since October, down 33% year todate.
Roblox said its Q124 revenue grew 22% to USD 801.3 million while bookings rose 19% to USD 923.8 million, in line with expectations. Roblox had targeted 20% bookings growth for the quarter. Its Net Loss of USD 270.6 Millom was almost the same as previous year quarter. Analysts were in fact expecting a wider loss of USD 326 million.
Wedbush's Analyst Michael Pachter said that investors'reaction to the results was a bit severe as Roblox's bookings growth came in only slightly below guidance.
The good news is that Roblox generated more free cash flow in Q124 than in all of 2023, more than doubling to USD 191.1 million.
Roblox said that it is operating more efficiently, aided by a shift to more AI driven moderation. Roblox has also reduced the growth rate of personnel costs by keeping headcount flat.
Roblox has been building an ads business over the past few years. Earlier in May, it introduced video ads that can be seen by users over aged 13. Roblox began resting real world commerce via a pilot initiative with Walmart.
Highlights from Roblox's results were - Average daily users increased 17% to 77.7 million. Average monthly payers rose 13% to 15.6 million. Average bookings per monthly payer grew 6% to USD 19.68. Hours engaged rose 15% to 16.7 billion.
Wall Street Analysts are bullish on Roblox with a Buy rating, Target price of USD 49.62, an upside potential of 63%.
Roblox Metaverse is an immersive 3D virtual space that allows players to experience different games, interact with other players and much more. The Roblox platform also provides developers with 3D development tools a d resources, where players can create their 3
D objects and world.
Roblox has launched "Roblox Education", aimed at facilitating STEM education through immersive environments to enhance student retention. This project has significant potential since most users of Roblox are young students.
Now Roblox is using Generative AI to take it to the next level with Roblox Chatbot called Assistant. Assistant will support the 3 phases of creation which are Learning, Coding and Building. This is an exciting time for Roblox.
I believe that Roblox is currently oversold and undervalued and it is a good time to buy Roblox for the exponential growth ahead.
As Warren Buffett likes to say When there is fear in the markets it is time to be greedy.
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Strong year over year growth, but the stock price only reflects a weaker guidance for the next quarter.
Cathie Wood bought more haha