Roblox Stock Slumps 17% After Earnings. It's Having Its Very Own Netflix Moment.

Dow Jones10-30 20:49

Streamers and children's videogames compete for somewhat different customers -- but both industries are grappling with a similar set of problems as user engagement slows.

Third-quarter earnings from Roblox show the challenges. The company said the number of daily active users on its platform dropped 9% from a year ago to 138 million. Engagement hours fell 15% to 34 billion.

Roblox poured money into child safety measures this year, which had a knock-on effect on user growth. But the numbers make for grim reading for a company aiming to capture 10% of the global gaming market.

Shares of Roblox tanked 17% to $43.55 ahead of Friday's opening bell. They were already down 35% for the year through Thursday's close.

Netflix finds itself in a similar bind. The video streamer has failed to ease investors' concerns about declines in engagement, even after it hired former Disney exec Peter Rice in a bid to boost its content slate.

Netflix stock was down 34% for the year through Thursday's close.

The slump in engagement overshadowed solid-enough results for Roblox late Thursday. The company reported a net loss of 32 cents a share, as revenue rose 16% from a year ago to $1.6 billion. Analysts polled by FactSet expected a loss of 43 cents a share.

 

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