According to Wolfe Research, sell Roblox shares while they continue to fall. Analyst Gal Munda downgraded the stock to underperformer after Roblox released a November business update last week that showed slowing growth, as well as earnings. from daily users decrease. “Our tone has always been negative despite our previous peer-to-peer performance ratings as there has been a cult-like investment base with our conversations with investors. reflects the fact that there are large organizations that support the name,” Munda wrote in a note Tuesday. “However, given the weak November numbers appear to be contrary to management’s expectations based on the rhetoric made during the Q3 earnings call, we believe this dynamic between the home base RBLX’s investment will shift and give way to a decline from current levels,” he added. Roblox stock is down more than 73% in 2022, more than the S&P 500’s 19% drop. Still, analysts expect further downside from here. His $24 implies that the stock could drop another 13% from Tuesday’s closing price of $27.58. Meanwhile, consensus estimates of bookings growth in the near to medium term remain bullish, according to the analyst. Roblox refers to its revenue as “bookings,” which the company generates through the sale of the Robux virtual currency. Players use in-game currency to purchase accessories for their avatars, as well as access additional game features. The analyst also has additional questions about how advertising will be integrated into the virtual gaming platform. Munda writes: “We now forecast a RBLX reservation CAGR from 2022 to 2025 of 12% (vs 14% previously), reducing our 2023 EBITDA estimate to $253 (versus $288). la earlier)”. He added: “It is unlikely to see sustained bookings growth for RBLX due to uncertainty over ad monetization and ability to drive profitable DAU growth in countries. its underdeveloped, we downgrade to Underperforming from Peer Performance”. —CNBC Michael Bloom and Sofia Pitt contributed to this report.