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Roblox (RBLX) Suffers From Poor November Figures, Stock Down
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Roblox (RBLX - Free Report) released its November business update on Nov 15, after which its stock tanked 15.7%. The panic in investors was primarily due to concerns over its slow growth and declining daily active users.
The company estimated its bookings for the month to be $222-$225 million, up 5-7% year over year, whereas last year during the same month, bookings grew 22-24%.
The daily active users rose 15% year over year to 56.7 million users but were still low compared to the last year’s 35% growth.
Roblox’s average bookings per daily active user continues to decline as they were between $3.92 and $3.97, down 7-9% from a year ago.
What is Hindering Growth at Roblox?
The company has said that the strengthening U.S. dollar against the Euro and British pound has impacted the sale of its virtual currency called Robux, which is its main stream of revenues.
Beside the strengthening dollar, tough macroeconomic conditions are impacting the figures of Roblox. Inflation has been on the rise until last month and the Fed, though by smaller basis points, continues to hike interest rates.
This has decreased consumers’ disposable income, which has forced them to cut costs on entertainment, as this is considered the least essential.
Per Newzoo, the games market is expected to generate $184.4 billion in 2022, down 4.3% year over year.
The impact of the same has been seen in other gaming companies like Activision Blizzard and Electronic Arts (EA - Free Report) , which have shown declines in their figures. The net bookings of Activision Blizzard fell 3% year over year for third-quarter fiscal 2022, whereas that for Electronic Arts fell 5% for its second-quarter fiscal 2022. EA has cut its booking forecast for the full year.
Take-Two Interactive (TTWO - Free Report) too cut its outlook for fiscal 2023 due to the weakening video game industry even after the recent launch of Marvel's Midnight Suns.
Beside the given opportunity, Roblox continues to work on strengthening its gaming content.
It recently released games like Vast Seas, Heroes Ultimatum, Skyfall, Dishonour and Tower Bound, and has released its slate for 2023 that includes Pixelria, Pet Simulator X, All Star Tower Defense, Nindo Story, Jail Break, and Roblox Blox Fruits. These high-quality games are expected to draw traction from young players and boost Roblox’s top line.
Roblox has been focusing primarily on entering the Metaverse by creating an immersive virtual world in the existing gaming platform and technology. Being an early entrant in the Metaverse, which is gaining popularity, Roblox has a first-mover advantage that will not only help it retain existing customers but also attract new ones.
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Roblox (RBLX) Suffers From Poor November Figures, Stock Down
Roblox (RBLX - Free Report) released its November business update on Nov 15, after which its stock tanked 15.7%. The panic in investors was primarily due to concerns over its slow growth and declining daily active users.
The company estimated its bookings for the month to be $222-$225 million, up 5-7% year over year, whereas last year during the same month, bookings grew 22-24%.
The daily active users rose 15% year over year to 56.7 million users but were still low compared to the last year’s 35% growth.
Roblox’s average bookings per daily active user continues to decline as they were between $3.92 and $3.97, down 7-9% from a year ago.
What is Hindering Growth at Roblox?
The company has said that the strengthening U.S. dollar against the Euro and British pound has impacted the sale of its virtual currency called Robux, which is its main stream of revenues.
Beside the strengthening dollar, tough macroeconomic conditions are impacting the figures of Roblox. Inflation has been on the rise until last month and the Fed, though by smaller basis points, continues to hike interest rates.
This has decreased consumers’ disposable income, which has forced them to cut costs on entertainment, as this is considered the least essential.
Roblox Corporation Price and Consensus
Roblox Corporation price-consensus-chart | Roblox Corporation Quote
The tough conditions have also slowed down spending on advertisement, which is another source of revenues for the free-to-play game company, Roblox.
Shares of this Zacks Rank #4 (Sell) company have fallen 72.9% year to date compared with the Zacks Consumer Discretionary Sector's fall of 33.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Per Newzoo, the games market is expected to generate $184.4 billion in 2022, down 4.3% year over year.
The impact of the same has been seen in other gaming companies like Activision Blizzard and Electronic Arts (EA - Free Report) , which have shown declines in their figures. The net bookings of Activision Blizzard fell 3% year over year for third-quarter fiscal 2022, whereas that for Electronic Arts fell 5% for its second-quarter fiscal 2022. EA has cut its booking forecast for the full year.
Take-Two Interactive (TTWO - Free Report) too cut its outlook for fiscal 2023 due to the weakening video game industry even after the recent launch of Marvel's Midnight Suns.
What Can Aid Growth at Roblox?
Despite the challenging times, the future of the gaming industry looks bright. Per PwC’s Global Entertainment and Media Outlook 2022-2026, the global gaming industry is expected to be worth $321 billion by 2026.
Beside the given opportunity, Roblox continues to work on strengthening its gaming content.
It recently released games like Vast Seas, Heroes Ultimatum, Skyfall, Dishonour and Tower Bound, and has released its slate for 2023 that includes Pixelria, Pet Simulator X, All Star Tower Defense, Nindo Story, Jail Break, and Roblox Blox Fruits. These high-quality games are expected to draw traction from young players and boost Roblox’s top line.
Roblox has been focusing primarily on entering the Metaverse by creating an immersive virtual world in the existing gaming platform and technology. Being an early entrant in the Metaverse, which is gaining popularity, Roblox has a first-mover advantage that will not only help it retain existing customers but also attract new ones.