Roblox Stock Tumbles: Missed Bookings, Soft Outlook Spark Concern

Roblox Corporation (NYSE: RBLX) shares took a tumble on Thursday, February 7, 2025, after the company reported fourth-quarter 2024 financial results that missed analysts' expectations for bookings and user growth. The online gaming platform also provided a soft outlook for 2025, with slower revenue growth and larger net losses expected. These developments have raised concerns about the company's long-term growth prospects and valuation.



Roblox reported bookings growth of 21% year-over-year in the fourth quarter, missing the analyst consensus estimate of 22%. The company's average daily active users (DAUs) grew by 19% year-over-year, also falling short of the analyst consensus of 21%. Additionally, the company's average bookings per DAU grew by only 1% year-over-year, indicating stagnant spending per user.

Looking ahead, Roblox expects first-quarter 2025 bookings of $1.125 billion to $1.150 billion, which is in line with the analyst consensus of $1.14 billion. However, the company's full-year 2025 outlook is less rosy, with revenue expected to grow between $4.25 billion and $4.35 billion, in line with analyst expectations of $4.29 billion. The company expects a net loss for the full year between $995 million and $1.07 billion, which is well above the analyst consensus of $927.2 million.

One of the primary concerns for investors is the gap between Roblox's free cash flow and net profits. The company expects to lose roughly $1 billion on a net basis in 2025 but expects to profit at least $800 million on a free cash flow basis. This trend is a headwind on returns because it dilutes shareholders. As long as this trend persists, it will continue to be a headwind on returns for Roblox shareholders.

Roblox's guidance for 2025, including slower revenue growth and larger net losses, has raised concerns about the company's long-term growth prospects and valuation. Investors may reassess the company's valuation and growth prospects based on these guidance figures, which could impact the company's stock price and market position.

In conclusion, Roblox's stock price tumbled after the company reported missed bookings and a soft outlook for 2025. The company's guidance for slower revenue growth and larger net losses has raised concerns about its long-term growth prospects and valuation. The gap between Roblox's free cash flow and net profits is also a headwind on returns for shareholders. Investors will be watching closely to see if the company can turn things around and meet its growth targets in the coming quarters.