TLDR
- Roblox shares dropped 4-5% following director share sales and Cathie Wood selling her holdings
- US bookings growth decelerated sharply to low-30% range in September from mid-to-high 50% in July
- European markets also experienced slowdown in bookings expansion from recent highs
- Non-core markets outside US and Western Europe continue performing at or near peak growth levels
- Wells Fargo and BMO Capital raised price targets citing strong user-generated content growth
Roblox stock took a hit this week, falling as much as 5% as investors processed multiple headwinds. The gaming platform’s shares faced pressure from insider selling and disappointing growth metrics in its most important markets.
A company director recently sold shares. Cathie Wood also decided to exit her Roblox position entirely.
But the real story is what’s happening with the numbers. M Science analyst Corey Barrett dug into September data and found something investors didn’t want to hear.
Daily Active Users are still growing nicely worldwide. The bookings picture tells a different story in core markets.
US bookings growth slowed to the low-30% year-over-year range in September. That’s a big drop from the mid-to-high 40% range in August.
July was even stronger with growth in the mid-to-high 50% range. That’s a steep deceleration in just two months.
Europe is seeing similar trends. The continent experienced slower bookings expansion compared to recent highs.
Barrett pointed to back-to-school seasonality as the culprit. He called it a “rationalization of growth in more mature markets.”
The good news? Not every region is slowing down.
Non-Core Markets Still Delivering
Markets outside the US and Western Europe are holding steady. These regions continue hitting growth rates at or near recent peaks.
Mobile Daily Active User growth actually accelerated from Q2 to Q3 across all regions. The US and Asia-Pacific saw low single-digit mobile DAU growth in September.
Europe and other global markets reached new engagement highs. The platform’s worldwide reach continues expanding.
Analyst Views Remain Positive
Wells Fargo and BMO Capital both raised their price targets for Roblox. They see strength in the company’s user-generated content model.
The analysts highlighted Roblox’s competitive position. They view the platform’s massive daily active user base as a key advantage.
Barrett acknowledged that overall bookings growth remains “objectively strong.” The problem is Wall Street had higher expectations based on global engagement numbers.
The deceleration in core markets came as a surprise. Many investors assumed strong DAU metrics would translate to matching bookings performance.
Roblox’s market cap sits at $92.94 billion. The stock has gained 126.89% year-to-date despite recent volatility.
Average trading volume stands at 8.5 million shares. Technical indicators currently show a buy signal.
The company faces ongoing challenges developing secondary revenue streams. Competitive pressures in the gaming space remain intense.
September data shows US and European bookings growth cooling from summer peaks while non-core markets maintain strong expansion rates.
