RBLX - Roblox: Loading Up On The Dip
2024-05-19 09:26:59 ET
Summary
- Roblox stock plunges over 20% after disappointing Q2 guidance and lowered FY 2024 bookings forecast.
- Q1 results show solid performance with bookings and profitability in line with estimates, driven by growth in APAC and older users.
- Challenges in content rollout and app performance affected bookings growth, but management has outlined strategies to address these issues.
- On a long-dated view, I remain bullish on the unique value of the Roblox franchise and its long-term potential for user and revenue growth that may exceed 20% CAGR through 2027.
- I view the >20% sell off as an attractive dip-buying opportunity.
Roblox (RBLX) stock suffered a steep plunge (>20%) after the company reported results for the first quarter of 2024. Although the performance in Q1 was solid, investors were displeased with management's Q2 guidance and FY 2024 outlook cut for bookings. While a guidance cut is always very disappointing, I am confident in Roblox management's ability to address monetization headwinds, ultimately bringing the bookings CAGR through 2027 back to the original guidance of >20%. While I turn slightly less optimistic on Roblox shares post guidance cut, I remain quite bullish overall on Roblox unique franchise value and long-term ability to drive user and monetization growth. On that note, I point out that shares are trading relatively cheap against my target price for the stock ($72/ share, see here ); and I suggest to consider the recent sell-off as an attractive dip-buying opportunity....
Roblox: Loading Up On The Dip