Following Wednesday’s late-day swoon, coupled with weakness in the futures during premarket trading, no stock was immune from selling pressure.
The last thing an issue needed was some bad news to intensify its potential decline.
That is precisely what happened to Roblox Corp RBLX, which is the PreMarket Prep Stock of the Day.
Roblox Pops And Drops Like The Market: On Tuesday, following a better-than-expected consumer price index reading, bulls ran rampant in premarket trading but then began to fade.
Although the indexes and related issues opened sharply higher, the bears took control off the opening bell and chewed away at a large chunk of the premarket gains.
Similarly, Roblox reached its highest level in nearly a month when it peaked early in Tuesday’s session at $35.37, but retreated to end the day at $32.25.
Despite the red tape on Wednesday, the issue was able to gain just under a dollar to close at $33.13.
The Roblox News: Before the opening Thursday, Roblox announced November metrics that did not meet investor expectations.
The company blamed the strengthening of the U.S. dollar against the euro, British pound and other foreign currencies during 2022 as having an adverse impact on bookings.
Moving forward, the impact of foreign currency fluctuations led to a reduction of approximately 4%-5% in the year-over-year growth rate for November bookings.
In a more stable currency environment, the company estimates bookings growth would have been 10%-12% year-over-year and average bookings per daily active user would have been down 3%-5% year-over-year.
PreMarket Prep’s Take On Roblox: When the issue was being covered on the broadcast Thursday, it was already deep in the red by over $3, trading under $30.
Investors were alerted to multiple lows in the $29.50 area in both November and December. In the event the issue was unable to hold that level, there was limited daily support.
In fact, the next daily low was on June 17 at $24.57.
RBLX Price Action: After a much lower opening ($29.25 vs. $33.13), the issue had a brief rally to $29.80 and resumed its move lower.
As previously mentioned, buyers were scant on the decline. As of 1:30 p.m. EST, it has declined to $26.86 and is attempting to remain in the $27 handle.
Roblox Moving Forward: If the June 17 low is breached, there are two monthly lows that the issue may be migrating to. The first one is the monthly low for June at $23.88. The monthly low (all-time low) was made in May at $21.65.
Investors looking to purchase the issue on strength may want to wait until the issue can maintain a sustained bid at its former support area of $29.50.
The discussion on the issue from Thursday’s PreMarket Prep show can be found here:
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