Roblox Corporation falls after Q4 results. Should you buy it?

By:
on Feb 21, 2022
  • Roblox Corporation announces 2021 results showing growing revenues.
  • But average bookings per daily active user goes down.
  • Share price trading at a new low below the debut price of $64.50 in the direct listing a year ago.

Roblox Corporation (NYSE:RBLX) is trading at an MPS of $49.12 after the fourth-quarter results of February 16, 2022. This is the lowest market valuation in the company’s public trading after hitting a low of $53.63 in the last week of January.

The low valuation comes despite a 108% growth in fiscal year revenues which hit $1.9 billion. The daily active users were up 32% to 54.7 million in the last month. The Achilles’ heel in the company’s performance is slow growth in bookings which grew by only 2-3% year over year.

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The company reported an average bookings per daily active user ranging from $4.02-$4.08, this being a decline of up to 23% from the prior year.

Roblox below debut price creating an opportunity to buy

Source – TradingView

Roblox went public on March 10, 2021, through direct listing making. The current price is slightly above the reference price of $45 given at the listing but below the debut price of $64.50. The technical analysis finds that RBLX has breached the potential support at $55 while the potential resistance will be at $88. The resistance is equal to MA 20 currently at $88.56. MA 50 at $83 remains below MA 20.

The expectation is that MA 10 will reverse the trend in the coming days to establish a sustainable upward trend that will stabilize at $88. If Roblox reclaims the $55 support with a confluence of price action such as the MA joining, then it will be a buy at the current dip.

Summary

RBLX will need to demonstrate its strategy in growing the average bookings per daily active user. With the market price below the debut price in the direct listing almost a year ago, the share is a buy. Prices are projected to stabilize at $88.

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