TLDR
- Roblox (RBLX) stock fell 17% to $43.55 before Friday’s open and was already down 35% for the year.
- Daily active users dropped 9% to 138 million, and engagement hours fell 15% to 34 billion.
- Q3 revenue rose 16% to $1.6 billion, and the adjusted loss of 32 cents a share beat the 43 cent estimate.
- Fourth-quarter bookings are expected to fall 10% to 15%, softer than analysts wanted.
- UBS cut its target to $50 from $53, and Goldman Sachs cut its target to $55 from $60.
Roblox (RBLX) stock dropped 17% to $43.55 before Friday’s opening bell. The sell-off came after the company posted weaker user and engagement numbers in its third-quarter report. The stock was already down 35% for the year through Thursday’s close.
Daily active users fell 9% from a year ago to 138 million. Engagement hours dropped 15% to 34 billion. Those are the numbers investors zeroed in on.
The company spent heavily on child safety measures this year. That had a knock-on effect on user growth. It is a tough pill for a company aiming to capture 10% of the global gaming market.
The headline financials were better than expected. Revenue rose 16% from a year ago to about $1.6 billion. Some reports put the figure at $1.7 billion, against a Wall Street forecast of $1.64 billion.
Roblox posted a net loss of 32 cents a share. Analysts polled by FactSet expected a loss of 43 cents. On paper, that is a beat.
Guidance Takes the Spotlight
The trouble came with the outlook. Management expects fourth-quarter bookings to fall 10% to 15%. That compares with a 12% decline in the third quarter.
The forecast assumes a sequential drop in monthly active users, in line with normal seasonal patterns. It also assumes similar monetization and a modest hit from the release of GTA VI. Investors did not like what they heard.
Spending on artificial intelligence and infrastructure also weighed on sentiment. Higher costs and falling bookings made for an awkward pairing. The stock paid the price.
UBS lowered its price target to $50 from $53 and kept a Neutral rating. The firm said Q3 bookings came in 4% ahead of Street expectations. Adjusted EBITDA margin hit 16.1%, versus the 11.4% the Street expected.
UBS also trimmed its forecasts. It now sees bookings growth of 3% for 2026 and 13% for 2027, down from 3% and 14%. Its margin expansion estimate for next year fell to 50 basis points from about 150.
The firm said visibility into 2027 remains limited. It also noted the stock is sensitive to AI-related headlines and competition. That is a lot of moving parts for one name.
Analysts Split on the Print
Not everyone turned bearish. Canaccord Genuity kept its Buy rating and $58 price target. The firm pointed to the highest seasonally adjusted platform retention since 2021, which it tied to algorithm improvements.
Goldman Sachs cut its target to $55 from $60 but stayed at Buy. It called the Q3 operating performance solid. It also said forward bookings guidance came in slightly below expectations.
Roblox is not alone in facing engagement worries. Netflix (NFLX) is dealing with similar concerns, even after hiring former Disney (DIS) executive Peter Rice to improve its content slate. Netflix stock was down 34% for the year through Thursday’s close.
Roblox’s market cap now sits near $37.5 billion. Analysts do not expect the company to turn a profit this year. In premarket trading Friday, the stock was changing hands around $46.
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