Wall Street Zen Downgrades Roblox (NYSE:RBLX) to Sell

Key Points

• Wall Street Zen downgraded Roblox from hold to sell, even though the broader analyst view still leans neutral with a consensus rating of Hold and an average price target of $87.07.
• Roblox recently reported better-than-expected EPS of -$0.35 versus estimates of -$0.41, but revenue of $1.44 billion fell short of expectations and the company remains unprofitable.
• The company also authorized a $3 billion share repurchase program, while recent insider sales and the stock’s trading level around $47 highlight continued investor caution.

Roblox (NYSE:RBLX - Get Free Report) was downgraded by investment analysts at Wall Street Zen from a "hold" rating to a "sell" rating in a report issued on Saturday.

A number of other equities research analysts have also recently issued reports on RBLX. Morgan Stanley restated an "overweight" rating and set a $62.00 price target on shares of Roblox in a report on Friday, May 1st. Citigroup decreased their price target on shares of Roblox from $90.00 to $70.00 and set a "buy" rating for the company in a report on Monday, May 4th. Wedbush cut shares of Roblox from a "hold" rating to a "neutral" rating in a report on Friday, May 1st. Needham & Company LLC assumed coverage on shares of Roblox in a report on Friday, May 1st. They set a "buy" rating and a $60.00 price target for the company. Finally, Wells Fargo & Company decreased their price target on shares of Roblox from $97.00 to $78.00 and set an "overweight" rating for the company in a report on Monday, April 6th. One research analyst has rated the stock with a Strong Buy rating, twelve have issued a Buy rating, fourteen have assigned a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, Roblox has a consensus rating of "Hold" and an average price target of $87.07.

Roblox Trading Up 0.6%

Roblox stock opened at $47.10 on Friday. The company has a debt-to-equity ratio of 2.45, a current ratio of 0.89 and a quick ratio of 0.89. The company has a market capitalization of $31.63 billion, a price-to-earnings ratio of -29.81 and a beta of 1.50. Roblox has a one year low of $40.15 and a one year high of $150.59. The company's fifty day moving average price is $52.48 and its two-hundred day moving average price is $69.51.

Roblox (NYSE:RBLX - Get Free Report) last posted its earnings results on Thursday, April 30th. The company reported ($0.35) EPS for the quarter, topping the consensus estimate 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 net margin of 20.69% and a negative return on equity of 277.69%. The business's quarterly revenue was up 43.4% on a year-over-year basis. During the same period in the prior year, the business posted ($0.32) earnings per share. On average, analysts forecast that Roblox will post -1.4 earnings per share for the current fiscal year.

Roblox announced that its board has authorized a share repurchase program on Tuesday, May 19th that permits the company to buyback $3.00 billion in outstanding shares. This buyback authorization permits the company to repurchase up to 9.5% of its shares through open market purchases. Shares buyback programs are typically an indication that the company's leadership believes its shares are undervalued.

Insider Buying and Selling at Roblox

In related news, insider Sean Jack Buckley sold 4,744 shares of Roblox stock in a transaction dated Friday, May 22nd. The stock was sold at an average price of $46.36, for a total transaction of $219,931.84. Following the sale, the insider directly owned 97,141 shares of the company's stock, valued at $4,503,456.76. This trade represents a 4.66% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Matthew D. Kaufman sold 14,356 shares of Roblox stock in a transaction dated Wednesday, May 20th. The stock was sold at an average price of $45.27, for a total value of $649,896.12. Following the sale, the insider directly owned 349,964 shares in the company, valued at approximately $15,842,870.28. This trade represents a 3.94% 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. Insiders sold 183,471 shares of company stock valued at $8,930,068 over the last quarter. Company insiders own 10.05% of the company's stock.

Institutional Investors Weigh In On Roblox

Institutional investors have recently added to or reduced their stakes in the company. Reyes Financial Architecture Inc. grew its position in Roblox by 164.4% during the fourth quarter. Reyes Financial Architecture Inc. now owns 312 shares of the company's stock worth $25,000 after buying an additional 194 shares in the last quarter. Hanson & Doremus Investment Management acquired a new stake in Roblox during the first quarter worth about $25,000. Fideuram Asset Management Ireland dac acquired a new stake in Roblox during the fourth quarter worth about $27,000. GW&K Investment Management LLC grew its position in Roblox by 76.3% during the fourth quarter. GW&K Investment Management LLC now owns 372 shares of the company's stock worth $30,000 after buying an additional 161 shares in the last quarter. Finally, Indiana Trust & Investment Management Co bought a new position in Roblox during the fourth quarter worth about $32,000. 94.46% of the stock is owned by institutional investors and hedge funds.

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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