Shares of Roblox (NYSE:RBLX) are down more than 10% today in light of a 1% decline in the Nasdaq 100. However, some of the decline in RBLX stock may be related to Netflix’s (NASDAQ:NFLX) recent earnings. While the two companies operate in different industries, Netflix reported a loss of 200,000 subscribers. As a result, investors may be concerned that people are spending less time and money on the screen.
Making matters worse, shares of RBLX stock are now down more than 60% year-to-date. In addition, Goldman Sachs analyst Eric Sheridan downgraded his rating for Roblox from “buy” to “neutral” and lowered his price target from $108 to $50. The new price target implies upside of 35%.
Goldman Sachs Downgrades RBLX Stock
Sheridan likely adjusted his price target to reflect the multiple declines in high-growth names, as he appears to be bullish on Roblox. The analyst characterizes Roblox as “growing above industry levels in terms of revenue with a strong long term margin potential.” Furthermore, Sheridan believes that daily average user expansion will pave the way for higher bookings. Bookings refer to the amount of Robux, Roblox’s virtual currency, that is bought by users. By 2026, Sheridan expects Roblox to post yearly bookings of $6 billion, which would imply a five-year compounded annual growth rate (CAGR) of 17%.
However, the company faces near-term headwinds, such as “slowing growth, margin normalization, and tough comparisons.” Sheridan expects management to address these headwinds, which could cause Roblox to offer a risk/reward scenario that is “more constructive.”
With that in mind, let’s take a look at five investors betting big on the metaverse company.
5 Investors Betting Big On Roblox
Tracking institutional ownership is important, as these large investors provide liquidity and price support for stocks. As of Q4, institutions own 75.15% of the float and 71.62% of all shares outstanding. Additionally, 223 funds reporting initiating a new position during the quarter, while 71 funds reported closing their position. Meanwhile, 659 funds reported owning Roblox, an increase from 501 in the prior quarter. With that in mind, let’s take a look at the company’s five largest shareholders:
- Altos Ventures Management: 82.78 million shares, or 15.31% ownership.
- Morgan Stanley (NYSE:MS): 40.55 million shares, or 7.5% ownership.
- FMR: 26.10 million shares, or 4.83% ownership.
- T. Rowe Price (NASDAQ:TROW): 21.88 million shares, or 4.05% ownership.
- Index Venture Growth Associates: 21.06 million shares, or 3.9% ownership.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
