Roblox (NYSE:RBLX) stock is surging today on the news of positive user growth. The gaming platform kicked off the week by releasing its key metrics report for September 2022, revealing some encouraging statistics. While it’s been a turbulent month and quarter for the video game producer, user growth has not slowed down. In fact, according to the report, it is growing steadily on some important levels, demonstrating the type of growth that Wall Street wants to see. RBLX stock shot up as soon as markets opened today, and it hasn’t stopped since. As of this writing, it is up almost 19% for the day with no indications that it will slow down.
What exactly did the September metrics report reveal that has Roblox surging today? Let’s take a closer look.
What’s Happening With RBLX Stock
Since its early 2021 trading debut, Roblox has struggled to regain its early trading momentum. The global gaming platform initially benefited from lingering Covid-19 effects. But as the world has reopened and demand for virtual experiences has eased, RBLX stock has been on a slow, steady downward trajectory. Shares have fallen 57% year-over-year (YOY), and some investors have lost faith in the company’s future.
The September report, though, should help breathe new life into RLBX stock. Daily active users (DAUs) are a very important metric for a gaming platform, and Roblox’s DAUs have been growing. According to the report, they reached 57.8 million in September, a YOY gain of 23%. The company also noted its users have spent 4 billion hours engaged on the platform, representing a 16% increase for the year. On top of that, it reported an increase in estimated bookings of 11%-15% YOY, ranging between $212 million and $219 million.
Roblox also reported some less positive news. Its estimated average bookings per daily active user (ABPDAU) ranged between $3.67 and $3.79, a YOY decrease of 7%-10%. However, the company accounted for this, citing the strength of the U.S. dollar versus foreign currency fluctuations negatively impacting bookings. As it states:
“We estimate that the impact of foreign currency fluctuations led to a reduction of approximately 6% in the year-over-year growth rate for September bookings. On a constant currency basis, we estimate bookings growth would have been 17%-21% year-over-year and ABPDAU would have been down 2-5% year-over-year.”
Even with some less-than-positive metrics, investors should regard the September report as a positive catalyst. It comes at an excellent time. One week ago, RBLX stock plunged after momentum generated by the Federal Reserve’s latest rate hikes sent many software producers plunging. In September 2022, InvestorPlace contributor David Moadel argued that Roblox’s disappointing financial metrics made it a stock to avoid, even amid the meme-stock rally.
What Comes Next
While the recent report doesn’t change the company’s financial problems, it should offer investors hope that it is well-positioned to continue growing and scaling operations. As InvestorPlace Assistant News Writer Eddie Pan recently reported, “The metaverse company boasts a network of 52 million users, signaling many use cases for monetization.” Famed contrarian investor Cathie Wood seems to share this perspective. Her ARK Innovation ETF (NYSEARCA:ARKK) recently picked up 107,199 shares of RBLX stock and an additional 201,280 shares one week later.
Wood saw RBLX stock as an undervalued growth play before the release of the September metrics report. Now investors have even more reason to bet on it before it surges even more as markets shift in 2023.
On the date of publication, Samuel O’Brient 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.
