Roblox Stock Crashes 11% on Cautious 2025 Outlook

Roblox Corporation (NYSE: RBLX) shares plunged nearly 14% on Thursday, February 7, 2025, following the company's fourth quarter and full year 2024 financial results. Despite reporting strong financials, investors were concerned about some trends in the business, particularly slower revenue growth and stagnant user spending. This article will delve into the factors contributing to Roblox's stock price decline and discuss the company's outlook for 2025.



Roblox's Q4 2024 financials were impressive, with revenue surging 32% to $988 million and bookings climbing 21% to $1.36 billion. However, daily active users (DAUs) grew by only 19% to 85.3 million, falling short of expectations. Moreover, spending per user barely budged, with average bookings per DAU increasing by just 1% year-over-year. This stagnant user spending raised concerns among investors, as it suggests that users are not spending more on the platform despite increased engagement.

Roblox's management provided guidance for 2025, showing slower revenue growth and larger net losses. The company expects revenue between $4,245 million and $4,345 million, representing a deceleration from the 29% year-over-year growth in 2024. Additionally, Roblox anticipates a net loss of over $1 billion in 2025, which is a significant increase from the $935.4 million net loss in 2024. This larger net loss could be a result of increased expenses related to platform enhancements, AI-driven discovery, and a growing virtual economy.

One of the bigger issues for Roblox is the wide gap between its free cash flow and net profits. In 2025, management expects to profit at least $800 million on a free cash flow basis but lose roughly $1 billion on a net basis. This discrepancy is primarily due to stock-based compensation, a non-cash expense that impacts net profits but not cash flow. As long as this trend persists, it will be a headwind on returns because it dilutes shareholders.



In conclusion, Roblox's stock price decline can be attributed to investors' concerns about slower revenue growth, stagnant user spending, and the company's larger net losses in 2025. While the company's financials were strong in Q4 2024, investors are worried about some trends in the business and the potential impact on future growth. As Roblox continues to invest in its platform and virtual economy, it will be crucial for the company to address these concerns and demonstrate its ability to drive user engagement and monetization.