Roblox (NYSE:RBLX) Shares Gap Up - Time to Buy?

Key Points

• Roblox shares gapped up on Monday, opening at $50.90 after closing at $47.56 and later trading around $52.86 on above-average volume.
• Analyst sentiment remains mixed but constructive overall: Roblox has a Moderate Buy consensus rating with an average price target of $86.30, though some firms recently lowered ratings or targets.
• The company recently reported better-than-expected EPS of -$0.35, but revenue of $1.44 billion missed estimates; Roblox also authorized a $3 billion share buyback, which can signal management thinks the stock is undervalued.

Roblox Corporation (NYSE:RBLX - Get Free Report) shares gapped up prior to trading on Monday . The stock had previously closed at $47.56, but opened at $50.90. Roblox shares last traded at $52.8630, with a volume of 2,489,982 shares changing hands.

Analyst Ratings Changes

Several equities research analysts have recently issued reports on the stock. Arete Research set a $95.00 price objective on shares of Roblox and gave the stock a "buy" rating in a research report on Monday. Wedbush cut shares of Roblox from a "hold" rating to a "neutral" rating in a research report on Friday, May 1st. BMO Capital Markets raised shares of Roblox from an "outperform" rating to an "outperform" rating in a research note on Monday. Oppenheimer assumed coverage on Roblox in a report on Friday, May 1st. They set an "outperform" rating for the company. Finally, Wells Fargo & Company cut their target price on Roblox from $97.00 to $78.00 and set an "overweight" rating on the stock in a research note on Monday, April 6th. One research analyst has rated the stock with a Strong Buy rating, sixteen have given a Buy rating, eleven have issued a Hold rating and two have issued a Sell rating to the company. Based on data from MarketBeat, Roblox presently has an average rating of "Moderate Buy" and a consensus target price of $86.30.

Roblox Stock Performance

The company has a market capitalization of $36.44 billion, a price-to-earnings ratio of -34.38 and a beta of 1.44. The stock's 50 day moving average price is $48.18 and its 200 day moving average price is $62.16. 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 earnings results on Thursday, April 30th. The company reported ($0.35) earnings per share (EPS) for the quarter, beating analysts' consensus estimates of ($0.41) by $0.06. Roblox had a negative return on equity of 277.69% and a negative net margin of 20.69%.The business had revenue of $1.44 billion for the quarter, compared to the consensus estimate of $1.74 billion. During the same quarter in the previous year, the business earned ($0.32) earnings per share. Roblox's quarterly revenue was up 43.4% on a year-over-year basis. Analysts expect that Roblox Corporation will post -1.4 earnings per share for the current year.

Roblox declared that its board has authorized a share buyback plan on Tuesday, May 19th that authorizes the company to repurchase $3.00 billion in shares. This repurchase authorization authorizes the company to purchase up to 9.5% of its stock through open market purchases. Stock repurchase plans are typically an indication that the company's leadership believes its shares are undervalued.

Insider Activity

In related news, insider Matthew D. Kaufman sold 14,356 shares of the firm's stock in a transaction on Wednesday, May 20th. The shares were sold at an average price of $45.27, for a total value of $649,896.12. Following the completion of the transaction, the insider directly owned 349,964 shares of the company's stock, valued at approximately $15,842,870.28. This trade represents a 3.94% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. 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 on Wednesday, May 20th. The stock was sold at an average price of $45.28, for a total transaction of $2,292,435.84. Following the transaction, the chief executive officer owned 852,214 shares in the company, valued at approximately $38,588,249.92. The trade was a 5.61% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last three months, insiders have sold 189,449 shares of company stock worth $9,179,410. Corporate insiders own 10.05% of the company's stock.

Hedge Funds Weigh In On Roblox

A number of institutional investors have recently bought and sold shares of RBLX. Cypress Wealth Services LLC bought a new position in shares of Roblox in the fourth quarter valued at about $2,373,000. Yarbrough Capital LLC boosted its holdings in shares of Roblox by 1,514.5% during the 4th quarter. Yarbrough Capital LLC now owns 57,331 shares of the company's stock worth $4,646,000 after buying an additional 53,780 shares during the period. Glynn Capital Management LLC bought a new stake in shares of Roblox during the 4th quarter worth about $5,706,000. Steadview Capital Management LLC acquired a new position in Roblox in the 4th quarter valued at about $12,884,000. Finally, Norges Bank acquired a new position in Roblox in the 4th quarter valued at about $435,424,000. Institutional investors and hedge funds 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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