- Benchmark Analyst Mike Hickey kept a sell rating on Roblox Corp RBLX with a Price target $21.
- Hickey cut financial estimates for third quarter 22 and fiscal year 22 as September KPIs confirmed a disappointing quarter ahead of earnings results on November 9th.
- Hickey was amazed by RBLX’s decision to continue with increased capital spending, which was expected to exaggerate a significantly challenging operating environment and degrade free cash flow.
- The analyst is cautioned that the pandemic has propelled growth and normalized behavior may dampen outlier engagement trends.
- Current consumer spending pressures for mobile gaming experiences could extend to the Roblox platform.
- Most kids don’t personally pay for their gaming experiences on RBLX and are therefore more open to switching games.
- Because parents don’t invest directly in the service, they are less emotionally connected and can easily curb spending as inflation rises.
- Hickey has been wary of ambitious growth initiatives, including child-focused promotional programs that could go beyond the core game and lead to stricter regulations.
- He figured RBLX would continue to appeal primarily to young children, and most would age as they entered their teens.
- He believed that many children would embellish their ages, which could skew the average and give the false impression that the RBLX demo is aging.
- He wasn’t convinced that RBLX offered a safe gaming environment.
- He was cautious about spending growth that now seems reckless.
- He believed China’s growth was hampered.
- Price promotion: RBLX shares traded 2.17% higher at $42.33 on the latest check Thursday.
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