Shares of Roblox tumbled on Friday as Wall Street responded harshly to the videogame company's quarterly guidance that forecasts declining bookings and slowing revenue growth.

Roblox stock sank 20% to $38.82 in premarket trading on Friday after ending Thursday down 2.9%. Shares have retreated 40% this year and enter Friday's session down nearly 11% in July.

BTIG on Friday downgraded the stock to Sell from Neutral. Benchmark Equity Research followed suit, downgrading Roblox to Sell from Hold.

"We believe the platform may be entering lifecycle decline, with weakness spreading from new-user acquisition in 1Q to monetization in 2Q and increasingly affecting the under-13 audience that powers its social graph, organic growth and parent-funded spending," Benchmark analyst Mike Hickey wrote Friday.

Wall Street's re-rating of the stock came after the company late Thursday reported a loss of 26 cents a share in the second quarter, compared with a year-earlier loss of 41 cents a year ago and Wall Street expectations for a loss of 34 cents.

Total bookings increased 8% to $1.57 billion but missed the analyst consensus call for $1.6 billion and also came in at the lower end of the company's guidance range of $1.55 billion to $1.61 billion.

Looking ahead, Roblox forecast third-quarter bookings at $1.58 billion to $1.65 billion, which would represent a decline of 14% to 18%. Analysts had been calling for around $1.9 billion. Roblox sees third-quarter revenue coming in between $1.41 billion and $1.49 billion, well below Wall Street's $1.86 billion forecast.

The company decided against issuing full-year guidance, saying "given our long-term focus, we do not believe annual guidance is a helpful tool for investors."