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Roblox Sinks 7% on News of Removing China App
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Roblox Sinks 7% on News of Removing China App

Shares of American video game developer Roblox Corporation (RBLX) sank more than 7% on the news that it had removed its LuoBuLesi app from China’s app stores. According to Reuters, Roblox is building another version of the app.

The company was listed in March 2020, and its shares have lost 21.4% so far. The stock ended the day down 5.4% at $84.37 on January 7.

LuoBuLesi App

In July 2020, Roblox launched the app in collaboration with a unit of the Chinese tech giant Tencent Holdings Ltd. Roblox had stressed the importance of the app in its prospectus, stating that China is an important market for its expansion and progress.

On December 8, the company removed its app from the China market app stores. When users tried to log in to the app after its removal, they were greeted with a message thanking them for using the “test version” of the app. Meanwhile, users complained that they were unaware it was a test version.

The app allowed users to both create as well as play video games and join virtual events. According to data analytics firm Sensor Tower, the LuoBuLesi app was downloaded approximately 1.7 million times.

Company Comments

Commenting on the removal, a Roblox spokesperson said, “We always knew that building a compelling platform in China is an iterative process, and we are thankful for the support of LuoBuLesi users and our global developer community… It is critical that we now make the necessary investments, including investments in our data architecture, in order to realize our long-term vision.”

Consensus View

Some of the Top Analysts have awarded Roblox a Moderate Buy consensus rating based on 8 Buys, 2 Holds, and 1 Sell. The average Roblox price target of $116.90 implies 38.6% upside potential to current levels. The upcoming earnings for Roblox’s fourth-quarter results are scheduled for February 24, 2022.

Stock Investors

According to TipRanks’ Stock Investors tool, investors currently have a Very Positive stance on Roblox, with 14% of portfolios tracked by TipRanks increasing their exposure to RBLX stock over the past 30 days.

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