Roblox Corporation (RBLX) shares plummeted 5.09% during intraday trading on Thursday, as investors reacted to potential new regulatory headwinds in Europe.

The sell-off came after a European Commission spokesperson indicated that Roblox could be designated as a very large online platform under the Digital Services Act (DSA), given its user numbers have surpassed the threshold. Such a designation would subject Roblox to a stricter set of rules and obligations, potentially increasing compliance costs and operational challenges in the region.

The spokesperson noted that the inclusion is "definitely possible" and could happen "sooner or later," which appears to have spooked investors concerned about the impact of tighter regulation on the gaming platform's growth and profitability.