Roblox (RBLX) Stock News and Forecast: Is the metaverse over?

Roblox (RBLX) was down as much as 23% in Wednesday's premarket to $55.50 after the DIY videogame platform for kids reported underwhelming quarterly earnings. It then opened near there and fell even lower to a session low of $54.55.

Roblox Stock News: a miss, a miss and another miss

Roblox, a star of the metaverse, reported not so good Q4 results late Tuesday. The company did $-0.25 in adjusted earnings per share (EPS) on $568 million in revenue compared to consensus estimates of $-0.11 EPS on $604 million in revenue. It did not seem to matter that Roblox increased revenue by some 83% YoY. The market and analysts focused more on the 49.5 million daily active users that fell short of the 50.1 million expected. The company also missed on total hours of user engagement. 

To answer the question in the title: no, the metaverse is obviously not over. Observers are staring at Facebook parent Meta Platforms' recent plummet in unison with that of Roblox and wondering what happened to 2021's metaverse euphoria. The truth is closer to the fact that neither of these companies are yet metaverse companies. They are both still mainly in the traditional digital space with an eye toward their independent metaverse futures.

Roblox, for its part, is still growing at an extraordinary pace, just not the pace that Wall Street expected. As the pandemic recedes in importance, children are mostly returning to school and outside activities. Hence, investors need to expect a more measured growth rate going forward.

RBLX key statistics

Market Cap	$29 billion
Price/Earnings	15
Price/Sales	18
Price/Book	71
Enterprise Value	$27 billion
Operating Margin	-21%
Profit Margin	-25%
52-week high	$141.60
52-week low	$53.63
Short Interest	7%
Average Wall Street Rating and Price Target	Buy, $106.15

 

Roblox Stock Forecast: a return to all-time low

The turnaround narrative for Roblox stock is now over. It looked from the past two weeks that the 9-day moving average's crossover of the 21-day was imminent, but after collapsing by more than a fifth in one session the downtrend should continue.

RBLX's prospects have diminished to such an extent that $60.50, which served as support in its first months as a public company, is now likely to act as resistance on the stock's way up. Of course, even mentioning resistance is giving the stock too much leeway.

Support is what any trader is searching for with this one. RBLX is down below its IPO price now, however, so the January 28 low of $53.63 is now the only anchor. Expect RBLX stock to at least sink to this level once again if not lower. The stock is near its 52-week low, but that low only came two weeks ago. If RBLX drops below this all-time low, there is really no certainty where it discovers support.

RBLX came within striking distance of the 23.6% Fibonacci retracement level at $74.39 this past week. It is this level that will signal that the stock's misery is over. Until then, the prospects for Roblox looks dreary.

RBLX 1-day chart

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