'Roblox' Shares Leap Over 10% Following Tuesday’s Plunge on First Quarter Financial Results

Ryan Epps, Tech Times 11 May 2022, 04:05 pm

Game creation and online platform Roblox secured a 12% rebound on Wednesday, May 11, following a somewhat disappointing Q1 earnings report, which pitted the stock at a 10% decline in after-market trading Tuesday night. The disparity was experienced due largely to Roblox's stock forecast, which read with "foreseeable future" losses wrought by the unraveling pandemic.

Although revenues rose year-on-year by 39% and engagement metrics by hours were boosted by 22%, bookings took a 3% hit at $631.2 million. The firm's virtual currency, coined "Robux," is where most of the bookings are accumulated, with an average per daily active user (DAU) sitting at $11.67 for Q1. Being among the first of its kind to dip its toes into the metaverse, Roblox was allowed immense staying power in the field, showcasing a 32% bump in total costs and expenses amid Q1.

As lockdowns wane, so too does engagement on the platform. Fewer children and young adults staying at home prove less monetary spending and hours spent on Roblox, which cost the company a great deal, hitting the brand with a 40% downturn in the last month alone, and a whopping 82% overall from its all-time high in 2021.

"We remained focused on delivering our innovation roadmap to unlock the full potential of the Roblox platform and drive long-term returns for investors," said Roblox CEO David Baszucki amid an earnings call. "Over the past two quarters, we have launched a number of notable innovations including spatial voice and layered clothing that will continue driving user growth, engagement and monetization."

Of main import for Roblox is finding new avenues for said monetization and growing that DAU average over the next several cycles, especially in acquiring older audiences with more spending power. Executives vie for a potential 1 billion users in its long-term stretch goals, which is quite dramatic in light of its current daily average user base of around 53 million. Metaverse, of course, remains a prime staple for the brand.

"We had expected year-over-year growth to bottom in April," explains Roblox CFO, Michael Guthrie amid an investor conference call. "Right now, it looks like it bottomed in March, which is good, so sequentially our year-over-year growth rates in April were better than they were in March, and on a year-over-year basis I expect that to be true in May and again in June."

It's not entirely clear why Roblox stocks took a steady bump on Wed., but most seem to point to the dip as a primary incentive driver. Despite its subtle gains, the company has drawn ire from some within the gaming community for its exploitative practices and incentivized gambling for children. Additionally, while platform costs on the likes of PlayStation, Apple, and Steam sit at a typical 30% for assorted transaction fees, Roblox takes a meteoric 75%, making video game creation revenues on the platform for average users rather unrealistic.