Roblox Corp. shares fell Thursday after another analyst said this week that the anticipated reacceleration in bookings is already priced into the stock of the youth-centric virtual-world platform.
shares fell as much as 8.5% to an intraday low of $32.74 and were last down 6.7%, while the S&P 500 index
was down 0.4% and the tech-heavy Nasdaq
was off 0.4%.
For the week, the stock is up 0.4%, compared with a 2.1% decline on the S&P 500 and a 3.3% drop on the Nasdaq.
Morgan Stanley analyst Matthew Cost downgraded the stock to underweight from equal weight and lowered his price target to $24 from $27.
The move follows Roblox’s better-than-expected performance metrics for December, which boosted shares by 10% on Tuesday and left one analyst skeptical about how loyal Roblox users will be in an economic downturn, especially since it is parents who are likely footing the bill for Roblox’s platform currency, Robux.
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“Heading into ’23, we had maintained a balanced view on Roblox as we believed that strong holiday seasonality and easy comps through mid ’23 would lead to a series of monthly metric releases showing accelerating bookings growth,” Cost said in a note. “However, following the significantly stronger than expected December results, Roblox is now up 28% [year to date] and we believe the [first half of 2023] reacceleration is now fully priced in, with more mixed catalysts ahead.”
He doesn’t expect the second half of the year to get any better, even as he estimates this January will be “the strongest ever and that growth will accelerate to 21%” by the second quarter of 2023, which, he notes, would be the fastest since 2021.
“That said, particularly when viewed on a monthly basis, we note that the comps become materially tougher beginning in May ’23 and we expect a strong [year-over-year] deceleration to begin in [the third quarter of 2023],” he wrote.
Of the 29 analysts surveyed by FactSet who cover Roblox, 11 have buy ratings, 10 have holds and eight have sell ratings, along with an average price target of $33.79.