Roblox: Don't Chase
- Roblox reported more weak Q1'22 numbers and provided weak estimates for April.
- The company continues to grow overall users and hours engaged, but the business faces tough comps in the key U.S. market.
- The stock bounced on weak numbers in a bullish sign, but Roblox has bounced too far to chase here.
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After warning people a few months ago that the struggles at Roblox () would persist, the stock likely reached a capitulation point last week. The online gaming and metaverse company continues to face toughinvestment thesis
Morgan Stanley analyst Katy Huberty highlighting very weak App Store revenues Apple (AAPL) is a bad signal for engagement on Roblox. She suggests Sensor Tower has revenue only growing 4% in May.
The Atlantic Equities cut to Neutral from a few days ago appears wise. Roblox will report another weak quarter in Q2. How the stock performs from here is key. So far Roblox hasn't hit new lows in a positive sign.