-- Roblox's (RBLX) growth will likely decelerate in the near term amid engagement headwinds tied to a mandatory age-check rollout, UBS Securities said in a Friday client note.
The video game platform reported a first-quarter loss late Thursday as bookings fell short of consensus estimates. The company implemented an age-check feature for accessing chat, a move that slowed new user acquisition and hampered growth, Roblox said in a shareholder letter.
In addition, management tempered growth expectations for full-year revenue and bookings.
"We became the first large online gaming platform to introduce age checks to access chat on a global basis," Chief Executive David Baszucki told analysts during an earnings call late Thursday.
The stock plunged 18% ahead of market close on Friday, and is down 44% so far this year.
"We still see Roblox as a beneficiary of secular trends in gaming and expect platform enhancements to support its ability to drive user growth/spend over time," UBS analysts including Christopher Schoell wrote in the note. "That said, we remain neutral given expectations for moderating near-term growth and engagement headwinds from age verification/regulatory shifts."
UBS slashed its price target for Roblox shares to $49 from $74.
For the second quarter, Roblox guided to 8% to 12% bookings growth, well below Wall Street's 29% estimate, according to the brokerage.
"We believe platform enhancements/content breadth will support Roblox's ability to drive user growth long-term, particularly in overseas markets where headroom remains," Schoell said. "That said, we see a transition period in the coming quarters with 49% of global users still remaining unverified, (versus) 55% last (quarter)."
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