Why Roblox Stock Fell Hard Today

Roblox's stock was downgraded today -- and investors reacted strongly to the news.

What happened

Shares of the gaming platform company Roblox (RBLX -11.44%) plunged this morning after an analyst downgraded the company’s stock and put a $30 price target on its shares.

Investors reacted quickly to the news and sent Roblox stock tumbling 8.6% as of 11:57 a.m. ET.

So what

Atlantic Equities analyst Kunaal Malde downgraded Roblox’s shares from overweight to neutral and put a $30 price target on the stock. Malde is concerned that slowing user engagement is a problem that could hurt Roblox’s growth.

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Image source: Getty Images.

An analyst’s downgrade for a stock doesn’t always elicit such a huge response from investors, but Roblox investors are on edge right now.

Over the past six months, the company’s share price has plummeted 76% after some disappointing financial results from the past two quarters and as investors continue to flee high-growth stocks right now.

Now what

It’s not all that surprising that Roblox investors are reacting strongly to the stock’s downgrade today. In general, investors are looking for any reason to dump high-growth tech stocks right now because they’re viewed as riskier investments.

Inflation is still near a 40-year high and the Federal Reserve is taking aggressive moves with interest rate hikes to bring it down. That’s left many investors feeling very uneasy about the market and cautious about growth stocks.

With the negative investor note and the tech-heavy Nasdaq Composite falling 3.3% today, it’s no wonder Roblox’s shares are falling.

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Source: https://www.fool.com/investing/2022/05/24/why-roblox-stock-fell-hard-today/

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