why is roblox stock falling

Full Answer

Should you buy Roblox stock right now?

They just revealed what they believe are the ten best stocks for investors to buy right now... and Roblox Corporation wasn't one of them! That's right -- they think these 10 stocks are even better buys. Rich Smith owns shares of Roblox Corporation. The Motley Fool owns shares of and recommends Roblox Corporation.

Is Roblox stock a smart investment?

Roblox's stock is richly valued, with its growth on the verge of falling off a cliff. School reopenings will significantly drive a decline in its core user base of 5- to 12-year-olds.

Is it too late to buy Roblox stock?

Roblox has a market capitalization of US$37b, so it's too big to fly under the radar ... It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you ...

Is Roblox stock a buy now?

Tyler Craig, InvestorPlace 7 Triple-A Rated Stocks to Buy Now “Roblox, as I noted in my previous column, has multiple strengths, including impressive growth, good monetization, and its alliance ...

Is Roblox stock a buy right now?

The company is a great buy as young gamers spend more time on the platform. But even after falling from the $141.60 high set in November 2021, the stock could get cheaper. The market will remain irrational longer than some will expect. Stockholders will need to wait out the storm and keep their long position in Roblox.

Is Roblox stock expected to rise?

Stock Price Forecast The 16 analysts offering 12-month price forecasts for Roblox Corp have a median target of 34.00, with a high estimate of 61.00 and a low estimate of 21.00.

Can Roblox stock recover?

A rebound in RBLX's shares is likely to happen in 2H 2022, when the company's bookings growth accelerate again benefiting from an easier base for comparison. But a recovery to the $70 price level is quite challenging considering the implied valuation multiples and the weakness in Roblox's US & Canada region.

Is it too late to buy Roblox stock?

It's not too late to buy Roblox, but more price-conscious investors may want to keep it on their watchlist to see if market volatility brings a more attractive entry point.

Is Roblox a buy sell or hold?

Roblox has received a consensus rating of Hold. The company's average rating score is 2.31, and is based on 7 buy ratings, 7 hold ratings, and 2 sell ratings.

How high is Roblox expected to go?

The 16 analysts offering 12-month price forecasts for Roblox Corp have a median target of 38.50, with a high estimate of 61.00 and a low estimate of 21.00. The median estimate represents a +17.09% increase from the last price of 32.88.

An analyst's sell rating on the stock caused Roblox to tumble

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage. Follow @tmfnewsie

What happened

Shares of Roblox ( NYSE:RBLX), a gaming platform, fell by 14.5% last month, according to data provided by S&P Global Market Intelligence, as investors continued to look beyond so-called pandemic plays and after the company's stock received a sell rating from an analyst.

So what

Roblox's stock began falling in mid-July after Benchmark analyst Mike Hickey initiated coverage of the tech company with a price target of $75 and a sell rating on the stock.

Now what

Roblox's stock has rebounded slightly in August and is up about 5% this month. Some investors are starting to rethink their strategy of selling off tech stocks because of rising COVID-19 cases, caused by the delta variant, across the U.S.

What happened

Shares of Roblox (NYSE: RBLX) were down 9.8% as of 10:32 a.m. ET on Wednesday, following the release of November engagement metrics.

So what

Investors were disappointed to see slowing growth in daily active users (DAUs) and time spent on the platform -- two key operating metrics that investors closely watch for insights about how well Roblox is attracting and retaining users.

Now what

The most important outcome of slowing engagement trends is how it impacts user monetization, since the more time spent on the platform is supposed to correlate to higher sales of Robux, the virtual currency used to unlock new experiences on the platform.

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Roblox's long-term prospects look promising, but there are some short-term concerns

Online game platform and game creation system Roblox ( RBLX -8.75% ) has performed well since its direct listing last year -- its shares began trading at around $60 and subsequently more than doubled over the next few months to hit a high of $141.60.

A solid quarterly result but with weaker growth

The COVID-19 pandemic has been disrupting industries of all kinds, especially airlines and hospitality, for almost two years now. For some companies though, COVID-19 has actually helped accelerate growth.

NYSE: RBLX

While solid, these numbers were weaker when compared to the previous quarters. For perspective, revenue grew 127% and 140%, respectively, in the prior two quarters. Besides, Roblox reported that total engagement hours in November 2021 -- while up 32% year over year -- came in weaker than the 4 billion hours clocked in August 2021.

Investors are moving away from growth stocks

The last two years were a great time to own growth stocks, with highflyers like Tesla rising more than tenfold between 2020 and 2021. The rising tide, however, has been lowered toward the second half of last year.

What's next for Roblox

Overall, Roblox's weaker growth and the change in investor sentiments toward high growth (but loss-making stocks) likely caused its share price to fall. Still, the company's long-term prospects remain largely intact.

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What happened

Roblox ( RBLX -6.86% ) has seen its gaming platform explode in popularity over the last few years, but growth stocks have fallen out of favor with investors in the past month.

So what

Growth stocks are underperforming value stocks to start 2022. The main reason for that is the Federal Reserve's intention to begin raising interest rates to curb the highest rate of inflation in nearly 40 years.

NYSE: RBLX

The 10-year U.S. Treasury rate has been rising since bottoming out in the summer of 2020. Companies are valued based on the present value of their future cash flows, so higher interest rates means those future cash flows are worth less to investors.

Now what

A rising interest rate is not a reason to sell Roblox. The company has continued to post strong growth recently. For the third quarter, revenue doubled year over year, with hours of engagement on the platform reaching 11 billion for an increase of 28% over the same quarter a year ago.

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