Roblox Shares Dip More Than 15% After Company Reveals Slow Growth In November

The share prices for a major gaming company, Roblox have experienced a major dip in the Thursday trading session.

This happened after the company shared its November business update. In the update, the company showed that the month of November was not good at all in terms of business growth.

The teams have revealed that they witnessed a great reduction in which their business had been growing. The firm attributed to the participation of the daily users has reduced their earnings.

After sharing the November business update, the company’s share prices ended up facing a 15.7% dip in the stock market.

Bookings for November

The executives at Roblox talked about the low and high booking estimations for the month of November.

A low figure of $222 million and a high figure of $225 million had been set for the booking estimations for November. This translated to between 5% and 7% growth of their business on a year-over-year scale.

However, in the month of November 2021, their booking estimations were set to a very high figure. At that time, the growth they had aimed for was between 22% and 24% on a year-over-year scale.

According to the executives at Roblox, it is the value of the dollar that has caused a major impact on their business.

The dollar lost its strength against the British pound and the euro in November, causing a major fall in their bookings. Just to be clear, the ‘bookings’ for Roblox translates to the common term ‘revenue’.

The company does not specifically deal with currencies on its platforms. Instead, it encourages the players on its platform to deal in Robux, which is Roblox’s virtual currency.

Whether it is buying premium features or buying dresses or accessories for the in-game avatars, the players use the Robux tokens to do it.

Average Bookings per Day

Roblox reported that the average bookings they recorded from their active users on a daily basis fell between $3.92 and $3.97.

Compared to the same month in 2021, the bookings have slipped between 7% and 9%. In November 2022, the overall daily active users recorded a 15% growth.

The 15% growth is compared to the month of November 2021. After the growth, the overall daily active user count has surged to 56.7 million users.

However, in the same month from the last year, the growth recorded was 35%.

Economic Pressure and the Gaming Industry

Like the rest of the world, the gaming industry is also badly impacted by macroeconomic pressures. The gaming industry is mainly formed of gamers who are from the middle class.

This means that the majority of the purchases that gamers perform are based on their budget and other expenses.

With the macroeconomic pressure rising, bringing in higher inflation/interest rates, and increasing the cost of living, even gamers have to take things slowly.

Just like other industries, the gaming industry has also witnessed a fall in demand for games and losses in sales. People are more worried about their livelihood than purchasing games and content.

Another major gaming company known as Take-Two Interactive also experienced a loss with its major gaming franchise, Grand Theft Auto (GTA).

With the company facing a slowdown in its demand and player base, it had to cut down on the outlook for the entire fiscal year 2023.

Take-Two Interactive also cited the macroeconomic conditions to be the main driver in slowing down their business.

FX Rates are a Major Upset

The year 2022 has been full of surprises for the entire world, especially for the forex exchange industry. Throughout the year, countries from around the world have tried fixing the inflation problem.

For this problem, they have continued increasing the interest rates but none of them were in-sync. This means that while the US had hiked the interest rates, the rest of the world had not.

However, as the interest rates started to low in the US in November, Europe, the United Kingdom, and other major countries started increasing the interest rates.

As a result, the dollar weakened versus the rest of the currencies in November. In this particular month, the dollar hit the lowest trading level against the EUR and the GBP which it had not hit for ages.

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