What’s the Reason?
For his part, MoffettNathanson analyst Clay Griffin predicted poor future performance for Roblox stock in The Fly. That report was the first to make the analyst’s initial statement on Roblox. Griffin predicted that Roblox stock would underperform the market and set a price target of $19 per share, which is about a 50% drop from where it had closed trading on Friday.
Griffin’s negative outlook on Roblox stock seems to be due to the company’s high market value. Roblox’s (NYSE:RBLX) price-to-sales (P/S) ratio has decreased from a sky-high 44 in 2021 to where it trades now, at nine. However, a P/S of nine is still somewhat pricey in absolute terms, particularly for a firm with decelerating sales growth.
Roblox (NYSE:RBLX) believes August revenue was up between 22 and 24% from last year’s period. To put it into context, sales increased by around 50% in August 2021. Some shareholders are worried about the stock’s price since revenue growth has slowed.
Griffin has also said that Roblox (NYSE:RBLX) is an “undeniably strong interactive entertainment platform,” which helps to even things. Insights like this serve as a helpful reminder that although the value is crucial, it is by no means the only thing to take into account. when investing. Additionally significant is the company’s reputation for excellence. Moreover, Roblox stock continues to show strength in various important measures.
Roblox (NYSE:RBLX) said in its August report, for instance, that it had an average of 59.9 million DAUs that month. As a comparison, it had 58.5 million DAUs in July, which significantly increased. Therefore, even if the value is high, investors in Roblox stock still have cause to be hopeful about this investment.
Today, an analyst began covering Roblox stock with a bearish price target.
Featured Image – Unsplash © Oberon Copeland