Roblox Q3 preview: Where next for the Roblox share price?

When will Roblox release Q3 earnings?

Roblox is scheduled to release third quarter earnings on Tuesday November 9.

Notably, the company has an investor day pencilled in for Tuesday November 16.

Roblox Q3 earnings preview: what to expect from the results

Roblox continues to rapidly acquire new users and improve engagement to keep them using its platform, driven by its success in attracting more users in international markets outside of North America and, even more importantly, more older users. In fact, Roblox said it was somewhere between 2.5x to 4.4x larger in the second quarter of 2021 than it was two years earlier in the second quarter of 2019, spurred on by the boom in online gaming seen since the pandemic erupted last year.

However, the one area for concern in its last set of results was a drop in average bookings per daily active user. Although this rose slightly year-on-year in the second quarter, Roblox said this was down 5% to 7% in July, painting an uncertain picture for the third quarter. This has come under pressure mainly as a result of easing restrictions, prompting people to spend less time online and more time out and about, as well as tougher comparatives from last year. Faster expansion in countries with lower incomes than the US and Canada, such as in Latin America and Asia, has also started to weigh on the amount each user spends.

Fortunately, the rapid growth in overall user numbers means Roblox remains in a strong position to keep on delivering strong growth in the third quarter and beyond. Analysts believe Roblox can deliver 30% growth in daily active users in 2021. DAUs grew 42% year-on-year in the second quarter, with slightly faster growth from users over the age of 13.

Bookings, which represents the value of its virtual currency Robux used by users to transact in Roblox’s metaverse, are expected to come in at $636.5 million in the third quarter compared to $496.5 million the year before. However, that would have slipped from the record $665.5 million booked in the second quarter of 2021.

Revenue is forecast to jump to $639.9 million from just $242.2 million last year, also marking a significant rise from the $454.1 million in sales booked in the second quarter.

The net loss is forecast to come in at $86.2 million, wider than the $49.4 million loss booked the year before.

Roblox shares have lost 17% since hitting all-time highs in early June and currently trade at $82.53. Still, that is up from the $64.50 Roblox shares started trading at after its direct listing back in March. The 10 brokers covering Roblox currently have an average Buy rating on the stock with a target price of $89.89, implying there is some 8.9% potential upside from the current share price.

Where next for the Roblox share price?

After reaching an all-time high in early June, the Roblox share price has been trending lower, hitting a 6-month low of $70. The price has extended its rebounded from this level facing rejection at the multi-month trendline. 

Currently the price trades relatively range bound, capped on the upper band by $86, the October high, and limited on the lower side by the 50 sma at $77.35. 

The RSI heading higher in bullish territory plus a push above the 200 sma is keeping buyers optimistic.  

Bulls may want to wait for a breakout above $86 to target $90, the September high, and $94.70, the late June high. 

Meanwhile sellers could look for a break below $77.90, the 50 sma, to target $70, the psychological level and October low. 

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