What happened

Shares of Roblox (RBLX -0.41%) were up 9.7% as of 12:06 p.m. ET on Tuesday. It's notable that other video game stocks were also trading higher. Electronic Arts and Take-Two Interactive were slightly up, while the S&P 500 index was down 1.6%.

There was no company-specific news to explain Roblox's bounce today. Other beaten-down growth stocks were trading higher, including Meta Platforms, Snowflake, and Netflix

So what

Roblox reported revenue growth of 39% year over year in the first quarter, but bookings, a non-GAAP (adjusted) measure of revenue, fell 3%. That trend worsened in April, with bookings accelerating the decline to between 8% and 10% year over year. In June, the company estimated that bookings for the month of May fell between 9% and 11% year over year. 

However, it's a still a good bet that Roblox's best days are still ahead. Management's actions continue to point to more growth. For example, Roblox recently opened a new data center in India to support the rapid growth happening in the region. 

Roblox released new features over the last few quarters, including spatial voice and layered clothing for users' digital avatars that management believes will drive user growth, time spent on the platform, and monetization opportunities.

Now what

From a valuation perspective, the shares hit a fairly cheap level recently when the stock was trading at a price-to-free cash flow ratio of about 25. It now trades at 43. Some investors might have looked at that valuation as attractive ahead of Roblox's long-term growth opportunities in the metaverse.

For what it's worth, the consensus analyst estimate has Roblox growing bookings by 4% in 2022 before accelerating to 15.5% in 2023.