On Friday, Citi adjusted its outlook on Roblox Corp. (NYSE:RBLX), revising its price target downwards to $40 from the previous $52, while still holding a Buy rating for the stock. The adjustment was made following the company's first-quarter results for 2024 and a revised forecast.
Roblox reported first-quarter bookings and average bookings per daily active user (DAU) that were slightly below analyst expectations. However, the number of DAUs was slightly higher than the consensus. Despite these mixed results, Roblox has chosen to keep its adjusted EBITDA guidance for 2024 steady. Nonetheless, the company has reduced its bookings guidance for the year.
In response to the updated company figures, Citi has modified its growth rate estimates for Roblox's bookings from 2024 through 2026. This revision is the primary reason for the lowered price target. The firm's statement explained the rationale behind the adjustment, noting, "We are updating our model to account for 1Q24 results and our latest outlook."
The revised price target of $40 reflects a more conservative expectation of Roblox's financial performance over the next few years. This new target takes into account the slightly disappointing bookings figures and the adjusted bookings growth rate forecast by Citi.
InvestingPro Insights
Roblox Corporation's (NYSE:RBLX) current financial health and market performance present a mixed picture, according to recent InvestingPro data. With a market capitalization of $20.97 billion, the company holds a significant position in the market. Despite this, Roblox's P/E ratio stands at -17.89, reflecting the market's anticipation of future earnings rather than current profitability. Notably, the company has experienced a substantial revenue growth of 25.69% in the last twelve months as of Q1 2024, indicating a robust capacity to increase sales.
InvestingPro Tips suggest that Roblox holds more cash than debt on its balance sheet, which is a positive sign for financial stability. Additionally, analysts are expecting sales growth in the current year, which may offer some optimism for investors. However, it's important to note that analysts do not anticipate the company will be profitable this year, and Roblox has not been profitable over the last twelve months. For investors seeking more in-depth analysis, there are 10 additional InvestingPro Tips available for Roblox at https://www.investing.com/pro/RBLX. To explore these insights further, you can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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