Roblox shares plunged nearly 27% after the company altered its recommendation algorithm to favor long-term retention over viral, highly monetized titles, erasing $9 billion from its market cap. The gaming platform reported second-quarter bookings of about $1.56 billion, up 8%, but forecast third-quarter bookings between $1.58 billion and $1.65 billion, well below Wall Street's roughly $1.77 billion estimate. Daily active users reached 123 million, a 10% increase from a year earlier but a 7% decline from the prior quarter. Chief Financial Officer Naveen Chopra warned that monetization weakness is likely to continue as the new discovery system steers users toward experiences that earn less per hour. The company is also strengthening age-verification controls amid regulatory scrutiny, adding friction that may further pressure near-term spending.
Roblox CorpAlgorithm shift reduces monetization per user, leading to weak bookings forecast and continued weakness.