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Roblox Stock Plunges on Q4 Miss, What’s Next For The Metaverse Play?

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 16 Feb 2022

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Key points:

  • Roblox stock plummets over 17% on Q4 earnings, missing EPS and revenue consensus
  • Roblox posted a loss of $0.25 per share, missing expectations of $0.12
  • It's not all bad for Roblox, with the platform recording a record number of new users

The immersion of the forthcoming ‘Metaverse’ has – like any new-age technology – caused quite a stir in the market lately. Video game platform Roblox is a figurehead of the movement, planting the foundations of the future of digital interaction; at least that’s what investors are clinging to. Roblox stock spiked to record highs late last year following the rebranding of Facebook to Meta Platforms – hinting at the evident focus on the metaverse. 

Since then, Roblox’s gains have given way to a much more realistic downside – given that the Metaverse isn’t quite where it needs to be for Roblox to post enticing revenue growth. This was seemingly proven in yesterday’s earnings – where the company heavily missed on EPS. 

With a loss of $0.25 per share, Roblox clearly missed analyst expectations of a loss of $0.12 per share. The company also missed on revenue, reporting bookings of $770.1M compared to the consensus of $772. There has been some improvement, with last year’s Q4 loss coming in at $0.30 and bookings of $642M. Edging growth wasn’t enough for Roblox – sparking a 17% drop in stock price in Wednesday’s premarket trading. 

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There is a silver lining for Roblox, and arguments for the Metaverse as a whole. Roblox’s daily users reached record numbers in Q4, up 33% from Q421 – illuminating the fact that Roblox’s seeds for the Metaverse might be starting to blossom. 

David Baszucki, CEO of Roblox looks to the year ahead with confidence:

“With nearly 55 million daily active users, Roblox is increasingly an integral part of people's lives…As we look ahead to 2022, we will continue to develop our technology to enable deeper forms of communication, immersion and expression on our platform.”

Investors are in tune to the fact that while Roblox might be growing, the company needs to find its wider financial moat in order to be a feasible investment. The company may be leading the charge into the Metaverse, but there is a long way to go yet. 

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.