What happened
Shares of video gaming company Roblox (RBLX +2.55%) are 2.5% lower as of 2:27 p.m. ET Wednesday, according to data from S&P Global Market Intelligence. It was bouncing back from an intraday sell-off that was pricing the stock down as much as 9.6% early in the trading session. The move follows yesterday's post-close release of a somewhat disappointing second-quarter report.
So what
Sales were healthy enough...sort of. The top line of $591.2 million was up 30% year over year. The figure still fell well short of analysts' expectations for revenue of $638.6 million, though. The loss of $0.30 per share also expanded on the year-ago loss of $0.25, versus expectations for a narrower loss of $0.22 per share.
That wasn't the shortcoming that initially spooked investors, however. More troubling was Roblox's booking metrics. Total bookings of $639.9 million slipped 4% year over year, with bookings for its daily average number of users falling 21% year over year to only $12.25. It was the second consecutive quarter both metrics fell to such a degree. For a company that's been deemed a leader in the metaverse movement, it's a concerning setback.
The scope of the intraday recovery effort, however, speaks volumes.
Now what
The knee-jerk reaction makes sense. But so does the rebound during the latter half of Wednesday. Investors are increasingly understanding that the company's current results are being compared to a time when the world was still in the midst of the pandemic, which kept people indoors, playing video games.
Now, they're getting out more -- and away from their computers. Yet Roblox is still growing its total top line.
NYSE: RBLX
Key Data Points
Today's sell-off and subsequent bounce won't mean much in and of itself. But it's still part of a bigger rally that's been underway since June, rooted in Roblox's role within the budding metaverse market that's still figuring out what it is and what consumers expect it to be.
To this end, while top-line growth is expected to come in at a relatively cool 4.4% this year, once we move past comparisons to pandemic-plagued periods, revenue growth should accelerate. Analysts are calling for sales growth of more than 13% next year, when the metaverse movement should be even better established.
Today's early plunge and big recovery is a reminder of just how volatile this ticker can be. But it's also a reminder that the longer-term outlook remains bullish for Roblox stock, which makes it a buy for anyone able to tolerate this volatility.
