Why Is Roblox Stock Falling And Should I Sell?
Shares in Roblox are in a downward spiral after the firm announced a monthly decline in users, but is this a unique buying opportunity?
June 17, 2021

Having fallen more than 11% this week alone, investors in video game developer Roblox (NASDAQ: RBLX) might be itching to hit the panic button.

However, it is probably a tad premature to press quit on this gamer just yet...

What's up with Roblox stock? 

On Tuesday night, Roblox unveiled that its daily active users (DAUs) for May had fallen 1% month-over-month, to a meager 43 million. The pandemonium that followed was only exacerbated by the company further disappointing investors with news that its average bookings per DAU -- the amount of virtual currency purchased per user -- is expected to decline 2% to 3% year-over-year (YoY), to between $5.02 and $5.09.

Now, a decline is still a decline, but I am choosing to look at the glass as half full. So let's look at Roblox's numbers from another perspective:


  • Its 43 million users is actually up 28% YoY.
  • Total hours spent gaming are up 9% YoY to 3.2 billion. 
  • Total bookings are expected to rise 26% YoY in Q2. 
  • Total revenue is expected to rise 126% in Q2.

With users forced indoors, growth was accelerated in 2020. Now, with parents ushering their kids into the sunshine once more, of course growth will decline. But this does not take away from the massive gains Roblox has made in the past year. 

For Roblox bulls, this dip could be seen as a great buying opportunity. As you'll see from the graph below, the video game industry is growing faster than any other media sector, and Roblox is at the forefront of the new trend of 'social' gaming. 

Perhaps this short-term dip will just be a blip on an otherwise long-term success story?

Want to invest in gaming stocks but worried about Roblox's volatile stock price? Start free access with MyWallSt today and get access to our market-beating collection of stocks.


MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.



The Home of Successful Investing.

© 2023 MyWallSt Ltd. All rights reserved.


Services

Content

Social

Company

Support


This website is operated by MyWallSt Ltd (“MyWallSt”). MyWallSt is a publisher and a technology platform, not a registered broker-dealer or registered investment adviser, and does not provide investment advice. All information provided by MyWallSt Limited is of a general nature for information and education purposes, and you should not construe any such information as investment advice. MyWallSt Limited does not take your specific needs, investment objectives or financial situation into consideration, and any investments mentioned may not be suitable for you. You should always carry out your own independent verification of facts and data before making any investment decisions, as we cannot guarantee the accuracy or completeness of any information we publish and any opinions that we publish may be wrong and may change at any time without notice. If you are unsure of any investment decision you should seek a professional financial advisor. MyWallSt Limited is not a registered investment adviser and we do not provide regulated investment advice or recommendations. MyWallSt Limited is not regulated by the Central Bank of Ireland. MyWallSt Limited may provide hyperlinks to web sites operated by third parties. Your use of third party web sites and content, including without limitation, your use of any information, data, advertising, products, or other materials on or available through such web sites, is at your own risk and is subject to the third parties' terms of use.