What Happened:

Shares of gaming metaverse operator Roblox (NYSE:RBLX) fell 26% in the morning session after the company reported first-quarter earnings results. Its full-year bookings guidance of 15% year-on-year growth missed analysts' expectations, and investors are punishing the stock because management said it would grow at 20%+ annually for the next few years at its November 2023 Investor Day. On top of that, the company announced it would start calculating adjusted EBITDA differently, raising some questions. Overall, the results could have been better.

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What is the market telling us:

Roblox's shares are very volatile and over the last year have had 18 moves greater than 5%. But moves this big are very rare even for Roblox and that is indicating to us that this news had a significant impact on the market's perception of the business.

Roblox is down 27.8% since the beginning of the year, and at $31.03 per share it is trading 33.8% below its 52-week high of $46.85 from December 2023. Investors who bought $1,000 worth of Roblox's shares at the IPO in March 2021 would now be looking at an investment worth $446.91.

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