Roblox share price falls 15.7% at closing after November Update

Roblox (RBLX) stock price fell after the November update showed slow growth YoY.
Bookings per daily active user fell by 9% YoY.

The visitor numbers aren’t small, but the video game industry is in a slump

Roblox released its November update on Thursday which revealed slowed growth rate and a fall in its revenue from daily users, after which its shares closed at a negative 15.7%. Roblox calls its revenue amount ‘bookings.’

Estimated revenue for the month is between $222 million and $225 million which is a 5%-7% growth over the same month last year. However, the growth in November 2021, was between 22% and 24% over November 2020. According to Roblox, the growing strength of the US dollar against the Euro was the reason for the low revenue growth rate.

The online gaming and game development platform generates revenue by selling its native virtual currency Robux. Users buy avatars or dress up their characters on the platform by making payments in Robux.

Average daily active user bookings were between $3.92 and $3.97 which is a drop of around 7%-9%. The daily active user count went up 15% to 56 million from November 2021, but last year’s growth was 35%, as per the company. RBLX shares have fallen by 73% year to date.

Roblox’s news comes at a time when the videogame industry is undergoing a slump. Unfavorable forex rates are the primary reason for this weakness. Another major firm Take Two Interactive Software Inc, the company behind the Grand Theft Auto franchise, lowered its growth forecasts for the present quarter and 2023 citing “current macroeconomic conditions.” Electronic Arts made a similar cutback.

2023 will be promising: Morgan Stanley

Morgan Stanley’s industry outlook also highlighted the sluggish performance in 2022, but is confident the numbers are going to be much better next year. Its blog post read:

‘After a sluggish 2022, the video gaming industry is set to unlock new levels of growth next year as more high-budget, high-profile games and next-generation consoles hit the market.’

The financial services firm listed several growth factors and concerns for the industry:

first, Futuristic consoles and new game launches are lined up in 2023. Several gaming companies canceled game launches this year due to ‘global supply chain disruptions’ and Morgan Stanley expects several new launches in 2023.

Second, In China, the regulatory policies for gaming may be easing next year. Gaming restrictions on Children imposed by the Chinese government are ‘likely to change.’ Also, ‘China approved several gaming licenses in September.’

And thirdly, gaming actually thrives throught recessions because sitting at home and gaming is cheaper than going out and that game sales have withstood cyclical fluctuations.

However, there are concerns that the tendency to push existing genres and concepts in games might slow down the growth rate, slow growth in the mobile games market and competition from short-form video creation platforms which are increasingly attracting potential gamers.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing