Remember that thing called the metaverse? Before AI walked away with all the glory, it was meant to be the next big thing. One of the companies associated with this new version of the internet is Roblox (NYSE:RBLX) and the video gaming platform has been burning cash in pursuit of the opportunity that has yet to take off.
Meanwhile, the losses have been racking up. In Q2, costs and expenses saw a sharp uptick to $994.8 million, resulting in the operating loss widening to $314 million compared to $170.3 million in the same period a year ago. Attributable net loss expanded from a loss of $176.4 million in the same period last year to $282.8 million. All told, the company delivered EPS of -$0.46, missing the consensus estimate by $0.02.
There were other misses too. Average daily active users climbed 25% year-over-year to 65.5 million but came in just below the analysts’ expectation for 65.8 million. Average bookings per daily active user recorded a 3% drop to $11.92, also falling just shy of consensus.
On the plus side, bookings reached $780.7 million, a 22% YoY increase that came in above the Street’s call by $2.72 million.
However, that was far from enough and it’s safe to say investors were not pleased with the results, with shares cratering by 22% in Wednesday’s session. That said, for BTIG analyst Clark Lampen, the latest readout doesn’t make that much of a difference to his overall thesis.
“Big picture,” says the analyst, “we exit the print without our model or expectations changing a great deal, and believe the risk/reward is skewed favorably with catalysts to look forward to over the balance of the year (continued rollout and adoption of ad solutions, quantification of ads/’24 guidance at the ’23 investor day, expansion of UGC/limited items, proliferation of AI development tools, and more). Despite that, we understand that investors may have some hesitation with the setup from here until we get to a point where there is a more concrete setup with forward estimates, or bridges.”
All told, Lampen sticks with a Buy rating although the price target is lowered from $60 to $54. Still, the new objective suggests shares have room for growth of 83% over the coming year. (To watch Lampen’s track record, click here)
Most analysts agree with that take, although not all are on board. Based on 12 Buys, 2 Holds and 4 Sells, the stock claims a Moderate Buy consensus rating. The majority feel the shares are now somewhat undervalued; going by the $39.18 average target, a year from now they will be changing hands for a 31% premium. (See Roblox stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
