Roblox Corp (NYSE:RBLX) positive bookings momentum will likely carry into the company’s second-quarter 2023 results on August 9, particularly as younger users entered their school breaks, according to Wedbush analysts.
In a note to clients, though, they maintained their ‘Neutral’ rating on the stock, as its shares trade near the $37 target price given what they called a “somewhat opaque path” to margin improvement against a backdrop of high external expectations for bookings growth for the foreseeable future.
“The setup into results appears positive for investors given the pullback and the visibility that the results call will provide management as it presumably reiterates its commitment to operating leverage and discusses its vision for newer products and AI,” the analysts wrote.
They also noted multiple tailwinds to the metaverse play’s momentum in the forms of aging up, lower levels of penetration overseas from a monetization perspective, and ads.
Analysts at Wedbush added that the recent pullback in the share price is a consequence of Roblox choosing to exploit its first-mover advantage in the metaverse over scaling margins.
Their 2Q bookings and adjusted EBITDA estimates are $785 million and $62.8 million, versus the consensus of $785 million and $48.2 million, respectively.
Shares of Roblox slipped 2.2% to $36.80 in late-afternoon trading on Thursday but have gained 32% in the year to date.
Contact Sean at sean@proactiveinvestors.com