Roblox (RBLX) stock sank as much as 30% in premarket trading Thursday after the company forecast annual bookings below estimates and missed on daily active user growth, igniting fears about a slowdown in growth after years of expansion. In Roblox gaming parlance, to be “bloxxed” is to be defeated or killed.
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The company said Fiscal year 2025 bookings are expected to be between $5.20 billion and $5.30 billion, below where the market had thought and marking a significant slowdown from previous years.
After bookings in 2024 rose 24% to $4.37 billion, the 2025 guidance implies bookings growth stepping down to around 20%.
For its Fiscal fourth quarter 2024, RBLX reported revenue growth of 32% to $988.2 million as bookings grew at a rate of 21% to $1.36 billion, which was a little short of the $1.37 billion expected. It came as both average active daily users and average monthly subscribers were up 19% year-on-year.
RBLX Misses on DAUs
However, the rise in daily active users to 85.3 million was short of the 88.4 million expected by Wall Street.
The metric has been the subject of controversy with Hindenburg Research warning last October that the company was conflating actual gamers with people simply visiting the site.
“Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%,” said Hindenburg at the time.
The short seller made the decision to disband last month. RBLX shares have rallied approximately 80% since the short attack by Hindenburg was published on October 8th.
Is RBLX a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy consensus rating on RBLX stock, based on 11 Buys, two Holds and one Sell. The average RBLX price target was $70.23 before the earnings update and is liable to change following its release.
