Roblox Corp (RBLX)

[DiscoverGold]

Roblox Corporation (RBLX) Failed to Disclose the Company’s Bookings and Revenue Growth was Unsustainable
By: Robbins | December 11, 2023

A shareholder filed a class action lawsuit on behalf of persons and entities that purchased or otherwise acquired Roblox Corporation (NYSE: RBLX) Class A common stock between March 10, 2021 and February 15, 2022. Roblox operates a video game platform that provides developers with tools to create games that are hosted on the Company’s servers.

According to the complaint, during the class period, defendants failed to disclose that: (1) the Roblox platform had insufficient content controls and lacked user spending restrictions; (2) these inadequate controls enabled younger Roblox users to play games with inappropriate content and make excessive, unauthorized Robux purchases; (3) a material portion of Roblox’s bookings and revenue growth was due to these excessive, unauthorized Robux purchases; (4) fourth quarter 2021 and 2022 bookings would be negatively impacted by Roblox’s planned rollout of enhanced parental controls; and (5) based on the foregoing, the Company’s bookings and revenue growth was unsustainable throughout the class period.

The truth was revealed on February 15, 2022, when Roblox issued a press release disclosing poor Q4 2021 results. Roblox reported Q4 2021 bookings at $770.1 million, well short of the $786.8 million analyst consensus target. Key performance indicators on audience size and engagement both showed sequential and year-over-year declines. Roblox’s slowing growth trend continued into 2022 as January bookings was estimated between $220 million and $223 million, a range that analysts called “very weak.” In reaction to these disclosures, the price of Roblox stock plummeted by 26.5% to close at $53.87 per share on February 16, 2022.

Read Full Story »»»

DiscoverGold