Shares of Roblox Corp (NYSE: RBLX) tanked nearly 20% on Thursday after the online gaming platform reported key metrics for November that signalled a meaningful slowdown in growth.
Roblox blames “FX” for weakness
Estimated bookings lingered between $222 million and $225 million last month. That translates to a year-on-year increase of 5.0% to 7.0%. But investors are not pleased because in November of 2021, that growth rate stood in the range of 22% to 24%.
“ABPDAU” – average booking per daily active user contracted as much as 9.0% from a year ago to $3.92. In its press release, Roblox attributed the weakness primarily to currency headwinds.
Strengthening U.S. dollar during 2022 has had an adverse impact on bookings [leading] to a reduction of approximately 4.0% to 5.0% in the year-over-year growth rate for November bookings.
Versus the start of 2022, Roblox stock is now down more than 70%.
Wedbush trims price target on Roblox stock
At the end of November, Roblox Corp had 56.7 million users – up 15% versus last year. Still, investors compared it to a much higher, 35% growth in daily active users in November of 2021.
Following the update, Wedbush Securities trimmed its price target on “RBLX” to $30. While that still suggests about a 10% upside from here, what it also signals is that the stock is going out of favour among the analysts.
Those interested in buying Roblox stock on the pullback should also know that insiders have sold $2.1 million worth of it over the past three months while none have been bought. That also hints at a lack of confidence.
In its latest report quarter, Roblox Corp had a significantly wider than expected loss (link).