Roblox Corporation (RBLX) Clearly Signals Buy-Into the Stock: Don’t ignore the signals

Roblox Corporation (NYSE: RBLX) stock fell -2.52% on Tuesday to $35.59 against a previous-day closing price of $36.51. With 5.64 million shares changed hands, the volume of the stock remained lighter than its average volume of 14.63 million shares. During the session, the Electronic Gaming & Multimedia company that operates in wider Communication Services sector, reached to the highest price of $38.22 whereas the lowest price it dropped to was $30.69. The 52-week range on RBLX shows that it touched its highest point at $73.71 and its lowest point at $21.65 during that stretch. It currently has a 1-year price target of $36.22.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of RBLX was down-trending over the past week, with a drop of -4.12%, but this was up by 26.70% over a month. Three-month performance dropped to -16.87% while six-month performance fell -10.67%. The stock lost -48.37% in the past year, while it has gained 25.05% so far this year. A look at the trailing 12-month EPS for RBLX yields -1.31 with Next year EPS estimates of -1.79. For the next quarter, that number is -0.52. This implies an EPS growth rate of -82.40% for this year and -11.90% for next year.

Float and Shares Shorts:

At present, 597.78 million RBLX shares are outstanding with a float of 473.61 million shares on hand for trading. On Oct 13, 2022, short shares totaled 39.01 million, which was 6.54% higher than short shares on Sep 14, 2022. In addition to Mr. David Baszucki as the firm’s Founder, Pres, CEO & Chairman, Mr. Michael Guthrie serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 70.67% of RBLX’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 37.63% of RBLX, in contrast to 28.99% held by mutual funds. Shares owned by individuals account for 26.54%. As the largest shareholder in RBLX with 6.70% of the stake, Morgan Stanley Investment Managem holds 36,819,657 shares worth 36,819,657. A second-largest stockholder of RBLX, Baillie Gifford & Co., holds 29,442,957 shares, controlling over 5.36% of the firm’s shares. The Vanguard Group, Inc. is the third largest shareholder in RBLX, holding 27,514,328 shares or 5.01% stake. With a 1.83% stake in RBLX, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 10,028,220 shares are owned by the mutual fund manager. The Morgan Stanley Instl. Fund-Growth, which owns about 1.47% of RBLX stock, is the second-largest Mutual Fund holder. It holds 8,054,301 shares valued at 229.23 million. Vanguard Mid Cap Index Fund holds 1.40% of the stake in RBLX, owning 7,665,939 shares worth 218.17 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for RBLX since 29 analysts follow the stock currently. There are 9 analysts who recommend BUY ratings, while 8 suggest SELL ratings. Of the remaining analysts, 10 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With RBLX analysts setting a high price target of $54.00 and a low target of $14.00, the average target price over the next 12 months is $33.83. Based on these targets, RBLX could surge 51.73% to reach the target high and fall by -60.66% to reach the target low. Reaching the average price target will result in a decline of -4.95% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. RBLX will report FY 2022 earnings on 02/14/2024. Analysts have provided yearly estimates in a range of -$0.43 being high and -$1.80 being low. For RBLX, this leads to a yearly average estimate of -$1.56. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Roblox Corporation surprised analysts by -$0.18 when it reported -$0.50 EPS against a consensus estimate of -$0.32. The surprise factor in the prior quarter was -$0.05. Based on analyst estimates, the high estimate for the next quarter is -$0.22 and the low estimate is -$0.70. The average estimate for the next quarter is thus -$0.51.

Summary of Insider Activity:

Insiders traded RBLX stock several times over the past three months with 4 Buys and 23 Sells. In these transactions, 681,693 shares were bought while 836,532 shares were sold. The number of buy transactions has increased to 33 while that of sell transactions has risen to 108 over the past year. The total number of shares bought during that period was 3,823,322 while 10,473,555 shares were sold.

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