Online gaming platform Roblox Corporation (NYSE:RBLX) is set to release its 4Q22 earnings report on Wednesday, February 15th, before the market opens. Ahead of the announcement, Bank of America reiterated its Buy rating and $54.00 price target for the company.
Analysts are optimistic about Roblox’s 4Q22 earnings, with expectations that the company’s EBITDA margin will surpass the 10% threshold indicated by management in November. This is due to strong 4Q bookings, which were driven by December outperformance and likely exceeded the company’s expectations.
While Bank of America does not anticipate Roblox will release guidance, the analysts do expect some indication of the company’s growth outlook for the year compared to its rates exiting 2022. The stock has numerous catalysts in 2023, any of which management could clarify on the call.
Improved Performance Expected in All Core Markets
Bank of America expects Roblox’s management to highlight improvement across all core markets, including the US and Canada, Europe, and East Asia. Additionally, an aging player base and expansion in content and the developer community are expected to be key drivers of growth.
North America is anticipated to have at least a flat YoY average bookings per hour after two quarters of contraction, while daily active users (DAUs) are expected to increase by a high single-digit percentage YoY. Last quarter, Roblox demonstrated its ability to penetrate its most mature market, which is encouraging for investors.
The analysts also expect a strong January bookings number due to follow-through from December and several game fund launches towards the end of 4Q22. Notably, Roblox and two of its most popular experiences appeared to set records for concurrent users.
Positive Momentum for 2023
Bank of America’s analysts are bullish on Roblox’s prospects for 2023, noting that the company has several catalysts that could drive growth throughout the year. These catalysts include an expanding developer community, the release of new games, and the continued aging up of its player base.
According to Bank of America’s note, “We think that the age-up thesis, combined with the expansion of the developer community, could provide upside to our bookings estimates, as new games could monetize and keep more players engaged on the platform.”
Furthermore, Roblox’s push into the metaverse and the company’s focus on innovation, including new features like Voice Chat and its music streaming service, could provide additional opportunities for growth.
Shares of RBLX Up in Mid-Day Trading
As of mid-day trading on Monday, shares of Roblox Corporation (NYSE:RBLX) were up 0.73%, indicating positive sentiment ahead of the company’s 4Q22 earnings release. With analysts bullish on the company’s growth prospects for 2023, investors will be eagerly awaiting the earnings report and management’s commentary on the call.
In summary, Roblox Corporation is poised for a strong 4Q22 earnings report, with analysts expecting improvement across all core markets, an aging up player base, and expansion in content and the developer community to be key drivers of growth. Furthermore, the company has several catalysts for growth in 2023, including an expanding developer community, the release of new games, and its push into the metaverse.