Roblox (NASDAQ: RBLX) shares plummeted on Wednesday following its third-quarter earnings release, which saw it miss earnings and revenue forecasts, but one analyst is surprised by the downside move.
The gaming platform's loss per share came in at $0.50 on revenue of $517.7 million. Analysts expected a loss per share of $0.30 on revenue of $690.79 million. Roblox's daily average users increased to 58.8 million, up 24% year-over-year.
“We are pleased with the third-quarter growth in users, engagement and bookings, which demonstrates the significant progress we are making on key platform initiatives such as aging up and international growth,” said Michael Guthrie, Chief Financial Officer of Roblox
Roblox shares plunged 21% in Wednesday's session. It is now down almost 70% in 2022.
Still, Citi analyst Jason Bazinet said he was a “bit surprised” by the fall in Roblox shares post-earnings.
Bazinet, who has a Buy rating and a $55 price target on the stock, stated in a research note to clients that Roblox reported Q3 bookings, adjusted EBITDA, average bookings per daily active user, and daily active users generally in line or better than consensus.
He added that the company's third-quarter revenue finished below the Street, partly driven by a $110M headwind linked to a change in estimated paying user life, but he viewed the change as positive for Roblox and said he was “surprised” by the weakness in Roblox shares on Wednesday.
In contrast, JPMorgan's David Karnovsky downgraded Roblox to Neutral from Overweight on Thursday, cutting the firm's price target on the stock to $35 from $53. The analyst said that even though the company saw a better trend over the prior three months, the overall result missed forecasts and was more variable than anticipated.