Roblox Corp. (NYSE: RBLX), which is the company that most matters to its investors, has reported a “decline” of the metric they care about the most – the average daily active user.
The video game platform finished its fourth financial quarter at 85.3 million DAUs – down from 88.9 millions in Q3.
Investors punished RBLX also this morning because its bookings guidance did not impress.
There is still reason to believe, however, that the 20% drop in Roblox’s stock after its earnings announcement on Thursday helped to de-risk it.
Roblox is still growing at a rapid rate
Investors can take comfort in the fact Roblox is still growing, and that too very quickly on an annual basis.
RBLX’s bookings in Q4 may not have met analysts’ expectations, but they were still 21% higher than last year. This is impressive given that RBLX has been around for a while.
As companies grow, their growth rate tends to slow. Roblox hasn’t seen that yet.
Apple Inc., one of the world’s most renowned companies, increased its revenue by 3% in 2024.
Compare that with a 21% increase at Roblox, and it suddenly doesn’t seem so bad.
Even though the company lost users in its most recent quarter, it still has 19% more users than a year earlier.
The revelation may have come a bit late for investors today, considering that Roblox opened Thursday with a 20% drop but has already risen more than 10%.
Roblox has an adequate TAM
The fact that Roblox continues to grow at a rate of high teens suggests that the metaverse trend is unaffected.
After a sell-off such as today, its shares are attractive because the company has an early mover advantage in the metaverse which Statista predicts will grow at 37% compound annualized through the end this decade.
If RBLX is able to unlock new use cases, such as advertising or education, then it will benefit significantly, as a key competitor fighting for a sliver TAM.
Even from a purely technical perspective, Roblox remains attractive, as the crash this morning did not push it below the 100-day MA. This suggests that the bulls remain in control.
Are RBLX Shares Worth Owning?
Roblox’s stock had a premium valuation, and there were high expectations. Both of these issues have been somewhat reduced following the sell-off last Thursday.
Is Roblox still a high-risk stock? You bet. It can also be a long-term investment that pays off.
This post Roblox stock (RBLX), which may have been derisked following a post-earnings drop, may be modified based on updates.
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