On July 31, Roblox Corporation fell 18.7% in regular trading, trading at $35.94/share, with turnover of $319 million. The sharp decline was driven by a disappointing Q2 earnings report, weak Q3 guidance, and multiple analyst downgrades.

Specifically, Q2 daily active users came in at 123 million, missing the consensus estimate of 128.71 million. Q2 bookings rose 8% year-over-year to $1.57 billion, below the expected $1.6 billion. While the Q2 loss of $0.26 per share narrowed from $0.41 a year earlier and beat estimates, Q3 revenue guidance of $1.41-$1.49 billion fell far short of the analyst consensus of $1.87 billion. The company also announced it will no longer provide annual guidance.

Deutsche Bank downgraded the stock to Hold from Buy, slashing its price target to $38 from $56. Wedbush downgraded to Neutral from Outperform, cutting its target to $40 from $65, citing near-zero visibility. Additionally, the EU confirmed Roblox has exceeded the Digital Services Act threshold and may be designated a very large online platform as early as August, facing compliance penalties of up to 6% of global annual revenue.

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