Roblox Shares Tumble After the Company Slashed Guidance. Is It Time to Buy the Dip or Stay Away?
Roblox Shares Tumble After the Company Slashed Guidance. Is It Time to Buy the Dip or Stay Away?
Geoffrey Seiler, The Motley FoolSun, May 3, 2026 at 8:52 AM UTC
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Key Points -
Roblox is feeling pressure from new age-verification protocols it implemented.
The effect looks like it could be long-lasting.
10 stocks we like better than Roblox ›
A difficult year for Roblox (NYSE: RBLX) stock got worse last week after the virtual gaming platform slashed its full-year guidance, sending its share price tumbling 18% in the next session. The stock is now down more than 44% year to date.
At the heart of the company's issue is its new age-check feature, introduced in January, which affects the user experience for non-age-verified users and is hurting new user acquisitions. Nearly three-quarters of Roblox users are minors, with about 35% under the age of 13. The changes were necessary, as the company faces multiple lawsuits against it alleging that it failed to protect children from sexual exploitation.
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Roblox management slashed guidance
As a result, the company took a hatchet to its bookings guidance, narrowing it to a range of $7.33 billion to $7.6 billion, down from a prior range of $8.28 billion to $8.55 billion. Because of how Roblox recognizes revenue, bookings are its most important metric, as they are a better indicator of how much users are spending on its platform. A lot of its revenue is recognized ratably, which makes it more reflective of past than current platform usage.
For the first quarter, Roblox's bookings jumped 43% year over year to $1.7 billion. However, with its new guidance, bookings are only expected to grow by 8% to 12% this year. Daily active users (DAUs), meanwhile, climbed 35% to 132 million, while monthly unique payers (MUPs) jumped 52% to 30.7 million. Much of the growth once again came from international markets, with DAUs up 40%. U.S. and Canadian DAUs grew 17%, and MUPs were up 19%.
Overall revenue increased by 39% year over year to $1.44 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), meanwhile, surged 71% to $99 million. However, Roblox continues to aggressively use stock-based compensation, which is removed from adjusted EBITDA. In the quarter, the company recorded $275 million in stock-based compensation expenses. This has recently become a much more closely scrutinized metric.
Looking ahead, the company is forecasting 2026 revenue to increase by between 20% and 25% to $5.865 billion to $6.135 billion, down from prior guidance of between 23% and 29% to a range of $6.02 billion to $6.29 billion. It's now looking for adjusted EBITDA of between $185 million to $325 million, up from a prior outlook of $30 million and $198 million.
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Is the stock a buy, or should investors stay away?
The new age-verification safety measures were a necessary step for Roblox, but they are likely to hinder its growth moving forward. I view this as more of a long-term headwind than just a one-time reset. Meanwhile, given its heavy use of stock-based compensation, I generally find the profitability metrics it reports to be low-quality. As such, even with this sell-off, I'd stay away from the stock.
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Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.
Source: “AOL Money”
