- Needham analyst Bernie McTernan reiterated his Buy on Roblox Corp RBLX and raised the price target to $42 from $39.
- Following a problematic November, RBLX bounced back in December and posted better-than-expected results virtually across the board, including better-than-expected DAUs, bookings, and hours of engagement.
- The critical question is how much of this beat is organic versus one-time benefits like holiday gift cards and one extra weekend day.
- The analyst assumes the beat was primarily organic and forecasted high teens reported bookings growth in FY'23E, relative to the 21% constant currency growth in December '22.
- McTernan noted that revenue missed his expectations, although the analyst continues to believe bookings are a better metric for monetization and views revenue as more of an accounting output.
- McTernan's estimates move higher in '23E and beyond, leading to the price target boost.
- Benchmark analyst Mike Hickey had a Sell rating with a $21 price target.
- RBLX reported Q4 net bookings that were slightly better than the consensus view but disappointed Benchmark estimates.
- RBLX plans to remove forward KPI transparency, which the analyst views as a negative development.
- Following the expected release of March 2023 monthly metrics in April 2023, RBLX will cease publishing monthly metrics.
- The analyst believes RBLX's video game platform is vulnerable to current and emerging negative macroeconomic trends, including inflation, unemployment, and wealth reduction.
- Hickey was astonished over RBLX's decision to continue elevated investment spend that should exaggerate a significantly challenging operating environment and deteriorate free cash flow.
- The analyst saw continued execution risk on both revenue growth and profitability.
- The analyst thinks RBLX remains painfully expensive, with meaningful room for further valuation deterioration.
- Hickey believes a lack of clear vision and discipline have challenged the CEO.
- Price Action: RBLX shares traded lower by 3.73% at $35.74 on the last check Wednesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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