Roblox shares see slow growth following its recent November business update.
Following a negative impact from the effects of a strong U.S. dollar, investors have begun selling Roblox shares in pre-market trading due to the gaming platform company’s unfortunate November business update.
As of now, Benzinga reports that Roblox shares are currently trading 10.44% lower at $29.67. Investors have expressed concern over the sale of a sizeable number of shares by several insiders of Roblox Corporation over the previous year.
Cause of Drop in Roblox Shares
The release of Roblox’s November business update comes after a general decline in the video game market. The developer of Grand Theft Auto, Take-Two Interactive, lowered its forecast for the current quarter and fiscal 2023 last month, blaming “current macroeconomic conditions,” according to CNBC.
Specifically, Roblox reports that the cause for the losses is due to bookings that have suffered as a result of the U.S. dollar’s rise versus the Euro, British Pound, and other currencies this year.
The company calculates that the impact of currency fluctuations resulted in a drop of about 4-5% in the bookings growth rate from the prior year.
“Our reduced forecast reflects shifts in our pipeline, fluctuations in F.X. rates, and a more cautious view of the current macroeconomic backdrop, particularly in mobile,” Take-Two CEO Strauss Zelnick said in a recent statement.
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Roblox November Business Update Shares
Although it reported 35% growth the previous year, daily active users overall increased 15% from November 2021 to 56.7 million people. Shares of Roblox are down about 73% year-to-date.
SimplyWall warns investors to be cautious as they have observed massive insider selling at Roblox over the past three months. During that time, insiders sold shares worth a total of US$2.1 million.
According to Roblox, the firm projects that bookings growth would have been 10% – 12% higher year over year, although ABPDAU would have decreased 3% – 5%.
Here are some of the November 2022 key metrics highlights provided by Roblox:
- Daily active users (DAUs) were 56.7 million, up 15% year-over-year
- Hours engaged were 3.9 billion, up 10% year-over-year
- Estimated revenue was between $190 million and $193 million, up 1% – 3%year-over year
- Estimated bookings were between $222 million and $225 million, up 5% – 7% year-over-year
- Estimated average bookings per daily active user (ABPDAU) were between $3.92 and $3.97, down 7% – 9% year-over-year
Similar to Roblox, Apple recently released its fourth-quarter results report in October and spoke of deterioration in digital advertising and gaming.
For a common shareholder, it is worth checking how many shares are held by company insiders. Specifically, when analyzing insider transactions, it is typically more useful to know if insiders are buying or selling because insider selling might have a variety of causes. However, shareholders should pay attention if insiders sell stock in large numbers over a short period since that may be a warning sign.
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