Stock of the day: Roblox drops 13% after 4th-quarter earnings sparks growth concerns
A dip in Roblox's daily active users sparked growth concerns on Wall Street and sent the stock plunging as much as 20% on Thursday.
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- Roblox stock plunged as much as 20% on Thursday after it reported mixed fourth-quarter earnings.
- The company reported a decline in daily active users, which sparked growth fears among investors.
- Roblox's cleanup of bots and inactive accounts could be tied to the decline, analysts said.
The move: Roblox stock plunged as much as 20.3% on Thursday, paring that decline to about 13% at 3:05 p.m. ET.
The chart:
Why: The video game platform released mixed fourth-quarter earnings that included soft guidance for 2025.
Roblox said it expected 2025 bookings of $5.20 billion to $5.30 billion, with the midpoint of that range below the average analyst estimate. It also reported that daily active users, a key metric tracked by Wall Street, declined to 85.3 million in the quarter from 88.9 million in the prior quarter.
What it means: For a company that's not yet profitable, all Wall Street cares about is growth, and when that growth is decelerating rather than accelerating, investors can get scared pretty easily.
What the pros are saying: Analysts at Bloomberg Intelligence said that the miss in daily active users during the quarter was "likely tied to the cleanup of inactive customers and bots on its platform after short-selling firm Hindenburg's claims of inflated user growth and child-safety" issues connected to the platform.
Technical analysis during the trading the session shows the stock found buying pressure at its rising 50-day moving average near $61.
