By Michael Elkins
Morgan Stanley reiterated an Underweight rating and $26.00 price target on Roblox Corp (NYSE:RBLX) after the video game company reported February metrics that were in line with expectations.
Roblox’s monthly bookings/DAUs came in 1%/2% ahead of estimates, while hours came in 7% below prior estimates. February marks the second consecutive month of ~20% y/y bookings growth.
Analysts wrote in a note, “Given RBLX's in-line performance in February, we leave our forward estimates unchanged, as we maintain our cautious view on the growth trajectory through the year.”
“…we continue to expect the current reacceleration to give way to a 2H deceleration, as compares will toughen considerably beginning in June...and ultimately, we expect RBLX to exit the year at a bookings growth rate of just 6% y/y (vs.20% in February). On the immersive advertising front, while the market remains focused on ads as a key growth driver/incremental revenue stream in ’23 and '24, we continue to expect that RBLX will roll this out at a modest pace, resulting in limited financial benefits in the near-term. Finally on the AI front, we see significant long-term potential for AI-driven content creation tools, but believe that it is still very early days as the company experiments with potential new offerings,” wrote the analysts.
Morgan Stanley also notes that comps will continue to ease through May before becoming ~1,900bp harder in June. In addition to the release of monthly metrics, RBLX disclosed that on 3/13, it moved all ~$150 million of its cash and securities that were held at Silicon Valley Bank to another financial institution.
Shares of RBLX are down 0.26% in mid-day trading on Thursday.