Roblox Corporation shares plummeted 22.91% in intraday trading on Friday, extending a sell-off that began in the after-hours session following the company's disappointing second-quarter earnings report and significantly weaker-than-expected third-quarter guidance.

The gaming platform reported Q2 revenue of $1.56 billion, in line with estimates, and a narrower-than-expected loss of $0.26 per share. However, bookings came in at $1.57 billion, missing the $1.6 billion consensus, while daily active users of 123 million fell short of the 128.71 million expected. The real shock came from the Q3 outlook, with bookings projected to decline 14% to 18% to a range of $1.58 billion to $1.65 billion, well below the $1.77 billion analyst consensus. Revenue guidance of $1.41 billion to $1.49 billion also badly missed Wall Street's $1.86 billion forecast. The company further rattled investors by withdrawing its full-year guidance, citing business variability and long-term focus.

The weak outlook reflects a confluence of headwinds, including changes to the platform's discovery algorithm that prioritize long-term retention over near-term monetization, tougher age-verification measures impacting younger users, and a comparison against last year's high-monetizing viral hits. In response, a wave of analysts downgraded the stock: Benchmark and BTIG cut their ratings to Sell, while Wedbush, Deutsche Bank, and BMO lowered their ratings, with price targets slashed across the board. Concerns over the EU potentially designating Roblox as a "very large online platform" under the Digital Services Act added to the negative sentiment.