Atlantic Equities says things aren’t going so well for Roblox. Kunaal Malade, analyst for Atlantic Equities, downgraded Roblox’s shares to neutral. She stated that the declining user engagement rates suggest trouble as Roblox tries to make its online gaming platform more profitable. Malde indicated that Roblox was taking the right approach and focusing more on monetisation. “YoY bookings trends for future should increase as comps are easier.” But, app download trends that are declining suggest engagement might continue to decrease in core markets. Atlantic Equities was also forced to reduce its share price target by $30 from $60. This new target price is consistent with the closing price of Atlantic Equities on Monday. According to the brokerage, the valuation of Roblox is “less appealing”. Although shares of Roblox are down 70% over the past year, analysts noted that Roblox’s competitors had done similar.[E]Even though the stock performed badly year-to date, peers have done better. Malde stated that the stock’s relative growth-adjusted value is less appealing than other stocks in our coverage. In Tuesday’s premarket trading, shares of Roblox fell 4%. —CNBC’s Michael Bloom contributed to this report.
