Roblox Q2 Warning Sends Gaming, Metaverse ETFs Down

The creator of the popular gaming platform noted “an unseasonable decline” in user engagement.

sumit
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Senior ETF Analyst
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Reviewed by: etf.com Staff
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Edited by: James Rubin

Shares of Roblox, creator of the popular gaming platform, plummeted by more than 20% on Thursday after the company provided downbeat earnings guidance for the second quarter and warned that user engagement was flagging. 

The company, which is at the intersection of gaming and the metaverse—a futuristic, more interactive version of the internet—pulled down many of the 131 U.S.-listed exchange-traded funds that hold its stock. 

The Roundhill Ball Metaverse ETF (METV), the Bitwise Web3 ETF (BWEB) and the Roundhill Video Games ETF (NERD), have the largest weightings in the stock, with allocations of more than 7%.  

In a shareholder letter posted along with its earnings press release, Roblox noted that user engagement on its platform during the first quarter “exhibited an unseasonal decline” that “was broad-based across regions, ages, and platforms.” 
 
Q1 daily active users of 77.7 million and hours engaged of 16.7 billion were up 17% and 15%, respectively, year-over-year, less than the 20% that the company would have liked.  

Bookings, the company’s preferred sales metric, also fell below that mark during Q1 with growth of 19% to $923.8 million. 

Roblox lowered its booking forecast for the full year by 4% to $4.05 billion—equal to growth of 15% compared to last year. 

Improvements  

Despite the first quarter headwinds, the Roblox sounded an optimistic note. 

“Our teams have been hard at work identifying opportunities to drive growth, and we have seen encouraging signs during the back half of April and early May with DAUs, Hours, and Bookings in the US & Canada back to around 20% year-over-year or higher,” the firm said. 

Analysts are largely bullish on the company. 

Of the 33 analysts tracked by Bloomberg, 24 have buy ratings on the stock, six have hold ratings, and three have sell ratings. 

The average 12-month price target is $48—60% higher than the current share price. 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.