Roblox (RBLX) stock cratered 17% on Friday after the company slashed its full-year guidance, blaming “short-term friction” from new safety protocols for a significant slowdown in momentum.
“In the US right now, we require an age check to communicate,” Roblox CEO David Baszucki told Yahoo Finance. While 65% of US users have successfully completed the check, the remaining 35% are unable to fully engage with social features like chat. “That can add some short-term friction. We have a lot of things underway to fix that.”
The CEO’s comments overshadowed first quarter results that showed pockets of resilience. For the period, Roblox reported revenue of $1.44 billion, up 39% year over year, topping consensus estimates of $1.42 billion, according to Bloomberg data. Meanwhile, daily active users (DAUs) reached 132 million — a 35% year over year jump — but trailed the 143.8 million analysts expected.
The true pain lay in the revised guidance. Roblox now expects full-year sales between $5.87 billion and $6.14 billion, a notable step down from its prior $6.29 billion estimate. Additionally, the gaming giant slashed its bookings forecast to $7.33 billion to $7.60 billion, well below its previous target of $8.28 billion to $8.55 billion.
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The primary culprit in this slowdown is the platform’s aggressive push into age verification, a requirement implemented to address regulatory and parental concerns over child safety. It’s implemented using facial age estimation technology, but the execution has proven challenging due to the platform’s large scale and technological limits.
This operational hurdle has drawn sharp skepticism from Wall Street. Bank of America analyst Omar Dessouky downgraded the stock to Neutral, cutting his price objective from $60 to $48. He noted that while Q1 bookings appeared stable, daily active users in key markets like the US, Canada, and Europe actually contracted.
“We were surprised, as was management, which did not anticipate the second order effects of rolling out age verification,” Dessouky wrote. He argued that losing access to communications reduced engagement both inside and outside of Roblox, impacting app store likes and YouTube views.
Beyond the verification hurdles, Roblox is shifting its search and discovery algorithms to prioritize long-term retention over immediate bookings. This strategic pivot, combined with safety mandates, makes the “viral hits” that drove previous growth cycles less likely to repeat, per Dessouky.
Despite the turbulence, Baszucki remains bullish on the company’s long-term trajectory. He highlighted that the 18-to-34-year-old segment is growing 50% year over year and noted that the platform is doubling down on agentic AI coding tools to accelerate content creation. While management is betting on higher payout rates for mature content to bridge the gap, the market remains focused on how long this “short-term friction” will last.
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