Roblox stock plummets after CFO resignation

Shares of the popular children’s video game platform operator, Roblox, experienced a significant drop on Thursday morning after Chief Financial Officer Michael Guthrie announced his resignation to pursue personal interests. Guthrie, who has been with Roblox since 2018 and guided the company through its IPO in 2021, alarmed investors and overshadowed an otherwise positive quarterly report. In a statement, Roblox indicated that bookings for the third quarter would range between $1 billion and $1.03 billion, surpassing the average analyst estimate of $935.8 million. In the second quarter, bookings increased by 22% year-over-year to $955.2 million, also exceeding analyst expectations. The company raised its full-year bookings forecast to as much as $4.23 billion. On May 9, the Roblox stock saw a 22% drop, the sharpest decline in over two years, after management’s bookings outlook for the second quarter missed Wall Street estimates. The entire video game industry is currently contending with a decrease in player numbers following a record surge during the pandemic. To counter the 'atypical decline in growth rates,' Roblox made improvements to its AI-based discovery algorithm and content placement on the homepage and introduced dynamic price hurdles in the marketplace. In a letter to shareholders, the company emphasized that the positive effects of these measures were still felt in the first month of the third quarter. Guthrie will remain with the company until a new CFO is appointed. Roblox is also increasing its investment in advertising, which constitutes a small but growing part of its business. The company has formed partnerships with brands like PacSun for in-game billboards and announced video advertisements in May with brands such as Elf Beauty, Walmart, and Warner Bros. In the second quarter, Roblox reported that 79.5 million daily users play the games of the San Mateo-based company, surpassing analyst estimates of 77.1 million. The growth was particularly strong among users aged 13 and older. As a platform that is especially popular among minors, Roblox has been combating online threats for years. Bloomberg recently reported an issue with pedophiles on the site. Since 2018, U.S. authorities have arrested at least two dozen individuals suspected of abusing or abducting children through the platform. Chief Safety Officer Matt Kaufman emphasized that safety is 'fundamental' for the platform and dismissed the notion that Roblox has a systemic problem with child endangerment.