Why Roblox Stock Was Higher During a Bearish Day for the Markets
shares Roblox (RBLX 13.97%) It was up 9.7% as of 12:06 p.m. ET on Tuesday. It is worth noting that other video game stocks were also trading higher. electronic arts And the Take-Two Interactive. interactive It was a little high, while Standard & Poor’s 500 The index fell 1.6%.
There was no company-specific news explaining Roblox’s bounce today. Other decimated growth stocks were trading higher, including meta padsAnd the snowflakeAnd the Netflix.
Roblox reported 39% year-over-year revenue growth in the first quarter, but bookings, a non-GAAP (modified) Revenue metric, down 3%. This trend worsened in April, with bookings accelerating to decline to between 8% and 10% year over year. In June, the company estimated bookings for May were down between 9% and 11% year over year.
However, it’s still a good bet that the best days of Roblox are still ahead. Management actions continue to indicate further growth. For example, Roblox recently opened a new data center in India to support the rapid growth taking place in the region.
Roblox has released new features over the past few quarters, including spatial audio and layered clothing for users’ digital avatars that management believes will drive user growth, time spent on the platform, and monetization opportunities.
From a valuation perspective, the shares hit a relatively cheap level recently when the stock was trading at a free cash flow ratio to about 25. It is now trading at 43. Some investors may have viewed this valuation as attractive before then. Roblox’s long-term growth opportunities in the metaverse.
For what it’s worth, consensus analyst estimates suggest Roblox bookings will increase 4% in 2022 before accelerating to 15.5% in 2023.