Roblox Stock Forecast: RBLX surges 14% on major accumulation day

Roblox (RBLX) stock led the way on Tuesday as a major sell-off in the morning gave way to a dip-buying extravaganza that pushed growth stocks far ahead. RBLX shares closed a surprising 14% ahead, while other notable names like Unity Software (U) and Coinbase (COIN) both offered up near 13% days. This was good news for Roblox, which is still off more than 59% year to date, but mysteriously there was no clear company-specific news to blame the rally on.

Roblox Stock Forecast: The case of the mysterious rally

The company behind the social gaming platform and future metaverse champion has been mute of late. No new corporate announcements can take credit for the surge in interest felt on Tuesday. It may just be a case of the usual suspects. Analysts have noted heavier mentions of RBLX on the infamous Wall Street Bets Reddit forum. This comes as past favourites like AMC Entertainment (AMC) and GameStop (GME) have seen their share prices take a hit more recently.

Like those two companies, Roblox is in the entertainment sphere, but unlike those two companies it seems to have a bright future. Talk of daily active users imploding post-pandemic has given way to a more gentle reduction. Management in mid-June estimated that bookings – deposits on the platform that have not yet been spent –  for the month of May were down approximately 10% YoY. This was not good, but it was in no way the catastrophic hemorrhaging of users that some Wall Street analysts predicted earlier in the year. In fact, Roblox gained 17% more daily active users in May than it did a year ago. It seems that while the platform exploded in popularity during the pandemic, it is still adding customers, just at a more reserved pace and with less revenue per user.

The Accumulation/Distribution chart at the bottom of the daily chart demonstrates renewed demand for RBLX since the first half of June. More than 136 million shares traded hands on Tuesday. It would seem that new buyers are storming into RBLX. 

The chart is also attractive just based on candles. Tuesday's large green candle surged straight through resistance at $37.50 to close just shy of $40, and the close was near the daily high. This latter data point gives us optimism that the rally has further to run. The next target is $45, where resistance was meted out in a range around this price level in April. One month before in March $52.50 was the agreed upon resistance level. 

The 9-day moving average should provide support around $35. Below there other support pivots are noticable at $27 and $25.

RBLX 1-day chart