Roblox Falls as Usage Rates Decline but Analysts Hold Ratings

Roblox  (RBLX) - Get Report shares fell Wednesday after the online video game giant reported a drop in daily usage in May and also said future per-user revenue will be lower, raising concerns that the company won’t bring in as much cash as expected when the economy reopens.

Roblox shares were down more than 7% in premarket trading after the virtual Lego-like gaming company reported a 1% decline in daily active users in May from April and also forecast bookings per DAU to be down 2% to 3% year-over-year.

The company, which went public earlier this year, reported 43 million daily active users in May. That was down from 43.3 million in April, but up 28% from May a year ago. In May, Roblox reported its first financial results since coming public in March.

Roblox and other gaming companies enjoyed unprecedented user surges during pandemic shutdowns, but with the U.S. economy reopening demand for home entertainment options is expected to fall or at least plateau.

That prompted at least two analysts to issue cautiously toned notes following Roblox’s announcement.

Truist Securities analyst Matthew Thornton said that “bookings look softer than expected,” though noted Roblox previously mentioned that bookings usually fall in May and then pick up in June.

Thornton earlier this month raised his price target on Roblox to a Wall Street high of $103 from $83.

Bloomberg Intelligence analysts Matthew Kanterman and Nathan Naidu said that Roblox’s daily active usage slowdown was “slightly worse than expected,” and “may weigh on sentiment given high expectations needed to support its lofty valuation.”

At last check, shares of Roblox were down 7.57% at $83 in premarket trading. The stock has risen nearly 30% since going public on March 10.