Ahead of quarterly earnings, Roblox Corporation (NYSE: RBLX) reported that for December 2022 daily active users reached 61.5 million, an 18% year-over-year increase. However, the estimated revenue is expected to be flat to slightly down. Roblox also announced that starting in April 2023 the company will no longer publish monthly metrics.
Analysis
The discontinuation of monthly metrics is probably a positive for Roblox as it will put the focus on long-term growth and discourage short-term trading. When Roblox reported its November metrics in mid-December the stock fell 15% in one day.
However, for those keeping track, December daily active users were 61.5 million, up 18% year-over-year and up from 56.7 million in November 2022. Hours engaged in December was up 21% over December 2021. The problem is revenue and average bookings per daily active user for the month are expected to show a slight decline.
Roblox is likely to see much of its growth prospects outside North America. The challenge with that growth is revenue per user outside the U.S./Canada is likely to be significantly lower.
Overall Roblox faces a challenge of having high expectations. Â The company had the largest video game IPO ever as investors looked at the company as a metaverse play.Â
In the DFC Intelligence Video Game Stock Index for 2022, Roblox was the worst-performing stock. This is not necessarily due to the poor performance but irrational investor expectations. Currently, Roblox is sitting at a valuation of about $22 billion with consensus estimates not expecting much growth. DFC believes the current valuation is a sign that investors are becoming more realistic.Â
