One of the more volatile stocks in today’s market is that of Roblox (NYSE:RBLX). At today’s lows, RBLX stock dipped more than 12%, before recovering to a loss of around 3% at the time of writing.
In many ways, Roblox’s one-day move is indicative of how bifurcated sentiment can be right now. On a day-to-day basis, we’ve seen incredible swings in the market back and forth. While most of these moves have been to the downside this year, it’s truly impressive how investor sentiment can shift on a daily or intraday basis.
Roblox remains a high-growth stock many investors still think is a great long-term bet. While there may be something to that (the metaverse is just in its infancy), this macro environment hasn’t lent itself well to companies like Roblox with high valuations. Still unprofitable, Roblox trades at a price-to-sales multiple of around 8X. For most companies, that’s still an aggressive valuation.
That said, there’s another catalyst investors are preparing for today. Let’s dive into what investors are watching with Roblox right now.
Why Is RBLX Stock So Volatile Today?
It’s earnings season. And given the volatility in RBLX stock today, it’s perhaps little surprise to many investors that it’s the company’s upcoming earnings report that’s generating so much of today’s volatility with Roblox.
Indeed, the company will report earnings after the bell today. Speculation of what the company will report appears to have turned negative for a number of reasons.
However, the primary reason for today’s negative price action with RBLX stock appears to be due to very bearish earnings that have come in from Upstart (NASDAQ:UPST) and others earlier today. Inflation, recession fears and higher interest rates affect all companies. Accordingly, the uncertainty with respect to high-growth companies’ earnings results is very high right now.
The consensus estimate for Roblox’s Q1 earnings is for $641.1 million in revenue and a loss of 23 cents per share. These numbers don’t factor in much growth and indicate Roblox is likely to remain unprofitable for some time. With investors de-risking their portfolios and choosing earnings quality over growth, that’s not a good thing.
On the date of publication, Chris MacDonald did not have (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.
