Roblox Earnings: RBLX stock tanks after moribund second quarter

UPDATE: Roblox stock tanked nearly 14% afterhours following second quarter results that left the market underwhelmed. Revenue of $591 million was well below consensus of $626 million. Bookings of $640 million was down 4% YoY. GAAP EPS of $-0.30 missed consensus by 5 cents. Though average daily active users was up 21% YoY to 52.2 million, average bookings per daily active user was down 21% YoY to $12.25. RBLX shares are off 12.9% in Wednesday's premarket at $41.23.

• Roblox reports earnings after the market closes on August 9.
• Wall Street expects adjusted EPS of $-0.26 of $626 million in revenue.
• RBLX stock has been in an uptrend since June 16 with shares rising 100%.

Though the Roblox (RBLX) stock price has doubled since June 16, shares appear intimidated in the lead-up to the videogame platform's second-quarter earnings in Tuesday's post-market. RBLX stock lost some ground on Monday and is down 1.9% on Tuesday's premarket at $48.

Also read: Apple Stock Deep Dive: AAPL price target at $100 on falling 2023 revenues

Wall Street expects adjusted earnings per share (EPS) of $-0.26 on revenue of $626 million. In the same quarter last year, Roblox produced a similar adjusted EPS of $-0.26 on sales of $665.5 million. The market is forecasting a continued drop in revenue then. In Q1, the company produced revenue of $631 million.

Roblox stock earnings

The least one can say is that RBLX is trading above the suggested retail price of $45 at its March 2021 direct listing. Of course this is 18 months later, and RBLX is trading 65% off its all-time high from November of last year. The market remains worried that the end of the pandemic's stay-at-home lifestyle means slower growth in bookings for the DIY videogame platform.

Roblox missed on both top and bottom lines for both of the two most recent quarters, so the optimism is scant with this one. Of the seven most recent analyst revisions to Q2 EPS, six were downward revisions.

NPD Group issued a report saying overall videogame fell by 13% YoY to $12.35 billion in the second quarter.

On a more positive note, last week MKM Partners raised its price target on Roblox stock from $28 to $40. The research firm said Roblox's bookings had strengthened faster than expected.

Management previously said May's daily active user figure had grown to 50.4 million, which was a 17% YoY increase. Some observers are taking that to mean Roblox may serve up a largescale revenue beat, but others are taking a wait-and-see approach. Management's estimate that May revenue fell just shy of $200 million also points toward a beat since that figure would have grown approximately 29% YoY.

Roblox stock forecast

From the daily chart below, it is easy to make out that Roblox stock has been on a serious uptrend since mid-June when it put in a higher low that signaled positively to the broader market. RBLX stock has largely been riding the 9-day and 21-day moving averages as support ever since as its uptrend has been slow and steady. 

The videogame stock easily made it through resistance at $45 and has unsurprisingly stalled out just below the next major resistance level at $52.50. A solid beat on Tuesday will lead to overcoming this obstacle as well that served as resistance in late March. After that is the support-turned-resistance level at $60.50.

The Moving Average Convergence Divergence (MACD) has been showing strongly bullish pressure for some time. Look for RBLX to use its primary moving averages for support. This stock seems unlikely to undergo another drastic sell-off at the moment.

RBLX daily chart