What Just Happened?
Roblox (RBLX) just suffered a brutal 13% drop after reporting mixed Q4 earnings, leaving investors scrambling for answers.
- Revenue: $988.2 million (+32% YoY) ✅
- Bookings: $1.36 billion (+21% YoY, but missed expectations) ❌
- Daily Active Users (DAUs): 85.3M (missed 88.3M estimate) ❌
- Net Loss: $219.6M (improved YoY but still steep) ❌
While revenue and bookings showed solid growth, traders focused on the disappointing DAU numbers and a weak 2025 outlook. Management forecasted $5.2B-$5.3B in bookings, but net losses are expected to deepen to nearly $1 billion—far worse than anticipated.
Traders' Immediate Reaction
The sell-off was swift as Roblox plunged from its open near $75 to an intraday low of $50.70, before settling around $65.51 (-13.2%).
- Big money is exiting: Institutions and funds dumped shares on the weak guidance.
- Retail traders are torn: Some see a dip-buying opportunity, while others fear further downside.
- Options traders turned bearish: Put volume spiked, with heavy activity at the $60 and $55 strikes for upcoming expirations.
The key concern? User growth slowing while losses balloon. Investors expected stronger engagement metrics to justify Roblox’s sky-high valuation.
Where’s the Opportunity?
Despite the ugly drop, traders can look at two potential angles:
🔴 For bears:
- If RBLX breaks below $60, we could see further downside toward $55 or even $50 in the coming weeks.
- The negative earnings surprise and slowing user growth could continue weighing on sentiment.
🟢 For bulls:
- Roblox still grew revenue 32% YoY, proving demand remains strong.
- If it stabilizes around $65, a rebound could be in play—especially if institutional buyers step in.
Tactical Moves: How to Trade This Setup
📉 Short-term traders: Watch for a break below $60 for a potential short setup. Put spreads (e.g., $60/$55) could work for downside exposure.
📈 Dip buyers: If Roblox holds above $65, a bullish call spread (e.g., $65/$75) could target a recovery play.
🔍 Long-term investors: If you believe in Roblox’s growth potential, waiting for further confirmation before adding shares might be wise.
The Trader’s Take (Noah’s Perspective)
Roblox just reminded everyone that growth alone isn’t enough—investors want to see a clear path to profitability.
As an earnings trader, I see two key problems:
1️⃣ User growth is slowing—and for a platform like Roblox, engagement is everything. If this trend continues, it could spell long-term trouble.
2️⃣ The company is still burning cash aggressively, and while revenue growth is solid, the forecasted losses are a red flag.
From a trading perspective, I wouldn’t jump in just yet. If Roblox falls below $60, I’d expect more downside. But if we see big money stepping in at $65, a short-term bounce could be in play.
Keep an eye on options flow and institutional positioning in the next few sessions—that will tell us where the smart money is going next.
RBLX