Roblox (NYSE:RBLX) Shares Gap Down - Time to Sell?

Key Points

• Roblox shares gapped down before Monday’s trading, opening at $48.20 after closing at $51.53, and were last trading below that level on heavier volume.
• Analyst sentiment has weakened, with recent downgrades from Wall Street Zen, BTIG, and HSBC; the stock’s consensus rating is now Hold, even though the average price target remains higher at $87.07.
• The company posted mixed quarterly results, beating EPS estimates but missing on revenue expectations, while also announcing a $3 billion share repurchase program and seeing notable insider selling tied to tax obligations.

Roblox Corporation (NYSE:RBLX - Get Free Report)'s share price gapped down prior to trading on Monday . The stock had previously closed at $51.53, but opened at $48.20. Roblox shares last traded at $48.3770, with a volume of 2,695,935 shares.

Analysts Set New Price Targets

RBLX has been the subject of several analyst reports. Wall Street Zen downgraded shares of Roblox from a "hold" rating to a "sell" rating in a research report on Saturday, May 30th. Barclays reduced their target price on Roblox from $115.00 to $60.00 and set an "equal weight" rating for the company in a report on Friday, May 1st. BTIG Research cut Roblox from a "buy" rating to a "neutral" rating in a research note on Friday, May 1st. Needham & Company LLC initiated coverage on Roblox in a report on Friday, May 1st. They issued a "buy" rating and a $60.00 price objective for the company. Finally, HSBC lowered Roblox from a "buy" rating to a "hold" rating and set a $46.00 target price for the company. in a research report on Friday, May 1st. One analyst has rated the stock with a Strong Buy rating, twelve have issued a Buy rating, fourteen have issued a Hold rating and one has assigned a Sell rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of "Hold" and a consensus target price of $87.07.

Roblox Stock Performance

The business's 50 day simple moving average is $49.18 and its two-hundred day simple moving average is $63.84. The firm has a market capitalization of $31.21 billion, a PE ratio of -29.24 and a beta of 1.44. The company has a current ratio of 0.89, a quick ratio of 0.89 and a debt-to-equity ratio of 2.45.

Roblox (NYSE:RBLX - Get Free Report) last released its quarterly earnings results on Thursday, April 30th. The company reported ($0.35) earnings per share (EPS) for the quarter, topping analysts' consensus estimates of ($0.41) by $0.06. The firm had revenue of $1.44 billion for the quarter, compared to the consensus estimate of $1.74 billion. Roblox had a negative return on equity of 277.69% and a negative net margin of 20.69%.The company's revenue for the quarter was up 43.4% on a year-over-year basis. During the same period last year, the business posted ($0.32) EPS. Research analysts expect that Roblox Corporation will post -1.4 earnings per share for the current fiscal year.

Roblox declared that its Board of Directors has initiated a stock repurchase program on Tuesday, May 19th that permits the company to repurchase $3.00 billion in outstanding shares. This repurchase authorization permits the company to repurchase up to 9.5% of its shares through open market purchases. Shares repurchase programs are usually a sign that the company's board believes its stock is undervalued.

Insider Buying and Selling at Roblox

In other news, CAO Amy Marie Rawlings sold 2,895 shares of the company's stock in a transaction dated Wednesday, May 20th. The shares were sold at an average price of $45.24, for a total transaction of $130,969.80. Following the completion of the sale, the chief accounting officer owned 35,238 shares of the company's stock, valued at $1,594,167.12. This represents a 7.59% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CEO David Baszucki sold 50,628 shares of the business's stock in a transaction that occurred on Wednesday, May 20th. The shares were sold at an average price of $45.28, for a total transaction of $2,292,435.84. Following the sale, the chief executive officer owned 852,214 shares of the company's stock, valued at $38,588,249.92. This trade represents a 5.61% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last quarter, insiders sold 189,449 shares of company stock worth $9,179,410. 10.05% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On Roblox

Hedge funds have recently made changes to their positions in the business. Reyes Financial Architecture Inc. raised its stake in Roblox by 164.4% during the 4th quarter. Reyes Financial Architecture Inc. now owns 312 shares of the company's stock valued at $25,000 after purchasing an additional 194 shares during the period. Hanson & Doremus Investment Management purchased a new stake in Roblox during the 1st quarter valued at approximately $25,000. Fideuram Asset Management Ireland dac bought a new stake in shares of Roblox during the fourth quarter valued at approximately $27,000. GW&K Investment Management LLC raised its position in shares of Roblox by 76.3% during the fourth quarter. GW&K Investment Management LLC now owns 372 shares of the company's stock valued at $30,000 after buying an additional 161 shares during the last quarter. Finally, Indiana Trust & Investment Management Co purchased a new position in shares of Roblox in the fourth quarter worth $32,000. Institutional investors own 94.46% of the company's stock.

Roblox Company Profile

Roblox Corporation operates Roblox, a user-generated online platform that enables people to create, share and monetize immersive 3D experiences and games. The core offering centers on Roblox Studio, a development environment that allows independent creators and studios to design interactive worlds using the company's building tools and scripting language. Content on the platform spans games, virtual hangouts, branded experiences and live events, all delivered through a persistent social environment.

Roblox's business model is built around its virtual economy and creator ecosystem.

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