Roblox Q4 preview: Where next for Roblox stock?

When will Roblox report Q4 earnings?

Roblox will report fourth quarter and full year earnings, as well as how its key metrics fared during January 2022, after the markets close on Tuesday February 15.

Roblox Q4 earnings preview

The fourth quarter is typically the busiest in Roblox’s year as users spend more time gaming online during the holiday season and the company is likely to cap-off a solid year with further growth in user numbers and engagement.

Wall Street forecasts Roblox will report a 95% rise in revenue in the fourth quarter to $604.3 million compared to the $310.0 million reported the year before.

That is on the expectation that Daily Active Users (DAUs) climbed to 50.05 million by the end of the fourth quarter, up from 47.30 million three months earlier and just 37.1 million a year earlier. Markets are expecting Roblox to deliver similar rates of growth in DAUs in North America (+8.6%) and Europe (+14.5%) as it did in the last quarter, leaving the APAC region (+93.8%) and rest of the world (+60.3%) to drive growth.

One area of concern for investors is the recent falls seen in average bookings per user, which has now declined for three consecutive quarters. This has come under pressure mainly as a result of easing restrictions, prompting people to spend less time online and more time out and about, as well as tougher comparatives from last year. Faster expansion in countries with lower incomes than the US and Canada, such as in Latin America and Asia, has also started to weigh on the amount each user spends.

It is also worth noting that Roblox had more users over the age of 13 on its books than under 13 for the first time in the third quarter, signalling that it is attracting a wider pool of users. Plus, older users are spending more time on the platform than younger ones, helping drive further engagement.

Bookings - which represents the value of its virtual currency Robux used by users to transact in Roblox’s metaverse - are forecast to hit a new record of $769.1 million in the quarter. Hours engaged is also expected to come in at around 11.2 billion, largely flat from the previous quarter and up from 7.4 billion the year before. Growth in engagement has become more difficult in 2021 amid the tough comparatives seen when online gaming boomed during lockdown in 2020.

The net loss attributable to shareholders is expected to swell to $84.5 million in the fourth quarter from the $58.7 million loss seen last year.

Where next for RBLX stock?

Roblox shares hit an all-time low of $53.63 in late January and has since climbed higher. Buyers managed to push the price up to a high of $73, in-line with the 50-day sma, before attracting sellers back into the market.

The 50-day sma is the first ceiling the stock must push past in order to target higher ground, to the $90 level of resistance seen throughout the first half of January and in-line with the 100-day sma.

However, if the current ceiling holds, we could see the stock sink toward $59, which has proven to be a floor for the stock on several occasions over the last three weeks. The RSI has recently slipped into bearish territory, supported by the fact average volumes over the past month have risen significantly above the 100-day average. Any move below $59 reopens the door to the all-time low.

Brokers are extremely bullish on Roblox’s prospects with 14 of them having an average Buy rating on the stock and an average target price of $108, some 61% higher than the current share price.

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