Roblox Crashes After User Miss, Soft Guidance Triggers Wall Street Downgrades
Roblox shares plunged 21% in premarket trading in New York - the most in two years if losses hold through the cash session - after second-quarter users and bookings missed Bloomberg Consensus estimates, reflecting softer engagement following the rollout of new child-safety measures.
Daily active users reached 123 million versus the 128.7 million consensus, while bookings totaled $1.56 billion, below the $1.6 billion estimate. Roblox forecast third-quarter bookings of $1.58 billion to $1.65 billion, representing a 14% to 18% decline and missing the $1.87 billion projection.
Age-verification requirements and other protections introduced for minors on the platform, prompted by child exploitation concerns, have weighed on growth and monetization. Additionally, some parents are dialing back video game screen time for their children, as constant screen time is being viewed by some as detrimental to developmental health.
Roblox also withheld full-year guidance, citing greater variability and rising infrastructure costs tied to AI investments. The shares had already fallen about 40% this year through Thursday's close.
Shares are down 21% in premarket trading.
"Contrary to our expectations, Roblox reported decelerating monetization, driven by UCAN and the U13 cohort. Q3 guidance was disappointing, and the withdrawal of FY26 guidance leaves visibility near zero. With this backdrop, we can no longer justify our positive stance here and are therefore downgrading to NEUTRAL. Monetization is soft while investment is rising, and beyond building better tools and incentives for developers to make more engaging, more monetizable 18+ content, much of the outcome is now out of Roblox's hands," Wedbush analyst Alicia Reese wrote in a note on Friday morning.
Here's what other desks are saying (courtesy of Bloomberg):
Bloomberg Intelligence
- "Roblox's 3Q bookings guidance at the high end is about 10% below consensus, showing that mandatory age checks for chat access and isolation of children's accounts are weighing more than expected on near-term user growth and engagement"
BMO Capital Markets (cut to market perform from outperform, PT to $45 from $100)
- Roblox is continuing to face pressure in 2Q, as bookings seem set to decline in 3Q
- "Shifting engagement from high-monetizing viral games from 2025 into new and evergreen titles with lower hourly monetization drove a 2.5% Bookings miss in 2Q, as 3QE guidance was 12.5% below Street (midpoint) as RBLX removed 2026E guidance."
Citi (buy, PT $70)
- The second-quarter report "looks solid," but the third- quarter forecast is "well below the Street" * Vital Knowledge
- The results show "a miss on some key usage figures," including daily active users and hours engaged, "and bookings growth was toward the low-end of guidance, while the Q3 bookings guidance fell short"
Spurs downgrades across Wall Street...
The average 12-month price target on the stock for Wall Street is around $57.29.