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Roblox stock drops following November decline in daily bookings

Yahoo Finance tech editor Dan Howley details how shares of Roblox are down following its November metrics data released.

Video Transcript

SEANA SMITH: Yeah, that's a very good point there.

All right, let's also talk about another big story today, Roblox. That stock is tanking, now off just about 16%. The move lower coming after the company's revenue growth slowed in November from a year ago. Strong US dollar partly to blame.

Dan Howley here on set with us, and, Dan, when you take a look at the gaming sector, obviously slowing industrywide. But Roblox, their slowing growth a huge concern for the Street.

DAN HOWLEY: Yeah, well, so revenue growth in 2021 was 102% for the quarter, right? Revenue growth for this past quarter was 2%. Whoa. That is a huge difference, right?

I think obviously part of this has to do with the fact that a lot of kids had started getting on Roblox at that point. It kind of was exploding more in popularity. I think there was more awareness of it as a result of the pandemic.

I think the more concerning issue is the slowing growth as far as hours engaged. They had 11.2 billion hours engaged, a 28% year-over-year increase in 2021. This past year, 13.4 billion, only a 20% year-over-year increase.

So, you know, Roblox is slowing as far as growth goes, and this really kind of speaks to the broader issues we're seeing across gaming where there's fewer people that are engaging as much because we're not glued to our couches.

SEANA SMITH: Yeah, Dan, exactly, and Roblox by far not the only-- far from the only company that is putting up numbers that are disappointing the Street. We just heard from Take-Two and their most recent earnings report. They lowered their guidance for the current quarter and also out to 2023. Do you see anything changing that narrative just in terms of a return to growth here in 2023, or do you think it's going to be a pretty consistent story?

DAN HOWLEY: Yeah, I think, you know, it depends, right? I think next year will be a better year. It's the comps to last year are crazy--


DAN HOWLEY: --for a lot of these companies. And as far as the big-name game companies-- the Take-Twos, the EA, the Activision Blizzards, the Sonys, Microsofts, Nintendos, they kind of were the victims of their own success in 2021.

2022 also didn't have that many huge games that, like, really blew people away. You had "Call of Duty," sure. Did $1,000,000,000 in 10 days, massive for Activision Blizzard. But there weren't really too many big tentpole releases in this holiday season. A lot of stuff got pushed to 2023. So, if anything, that's going to be a boon for next year.

I think as far as the gaming industry in general, mobile gaming is really taking a hard hit. That's the same reason that we're seeing it for general gaming but also because advertising-- digital advertising is falling. You know, hello Facebook and Snap. So the same impact is being felt at mobile-- as far as mobile gaming goes. So it's this two-pronged attack I think for game companies, especially with the mobile side because that's the fastest-growing part of gaming. So I do think 2023 will be better, though.

DAVE BRIGGS: But again, another reflection of the retail sales, this shifting of spending away from goods, away from electronics towards services, towards travel, towards experiences, not including gaming at home.

SEANA SMITH: Are you gaming as much as you were in 2020?

DAN HOWLEY: Oh my God, yes. That's crazy.

SEANA SMITH: There you go. You're helping these companies.

DAVE BRIGGS: That's a given.

DAN HOWLEY: I play video games with my wife every night. It's awesome.

SEANA SMITH: I know. I know you do. Yeah, you're one of the customers that they can always count on.

DAN HOWLEY: I was at the store buying Pokemon. That's--

SEANA SMITH: Yeah, I don't think I've done gaming since maybe I was like seven or eight years old. And it was like [INAUDIBLE].

DAVE BRIGGS: The teenagers, I haven't seen them game in my house in almost two years.

SEANA SMITH: Really? That's interesting.


SEANA SMITH: That's very interesting because the younger generation-- all right, well--