An industry expert explains why Wall Street is wrong. By Investing.com

Roblox’s latest quarterly earnings release showed the company’s booking guidance was disappointing, sending its stock plummeting more than 22% in Thursday’s session.

But one industry analyst said the focus should be on the long term rather than immediate numbers.

Roblox is missing instructions.

Although the booking outlook was disappointing, Roblox reported first-quarter financial results that beat analysts’ expectations for revenue and revenue. The company reported a first-quarter loss of -$0.43 per share, $0.10 better than analyst estimates of a loss of -$0.53 per share.

Revenue of $801.3 million for the quarter topped consensus estimates of $769 million and was up 22% year-over-year. First quarter bookings increased 19.4% year over year to $923.8 million, within the company’s guidance range of $910 million to $940 million.

The company’s guidance for second-quarter bookings of between $870 million and $900 million fell short of analyst consensus of $902.5 million, sending the stock down significantly. Roblox expects total reservations in 2024 to reach $4 billion to $4.1 billion.

Investors reacted negatively to the reservation guidance, eclipsing Roblox’s first-quarter revenue and bottom line, as reflected in a significant drop in its stock price.

Industry experts defend Roblox

But Yonatan Raz-Fridman, CEO and founder of Supersocial, disagrees with Wall Street’s assessment of Roblox’s quarterly earnings.

Supersocial is Roblox’s leading developer of virtual world experiences for brands including Walmart (NYSE:), Universal Music Group (AS:), elf Beauty (NYSE:), and more.

“As a developer, what matters is the potential, not the revenue generation,” argues Raz-Fridman.

“Daily active users are growing by the millions, people are spending more time on the platform, and more than 50% of them are over 13,” he says. “For younger users, we are seeing a slowdown in spending and an increase in bookings, but the future purchasing power of the Roblox-based generation is enormous.”

Raz-Fridman isn’t worried about monetization just yet, noting that this is still a new industry and an entirely new path for both brands and users to consider how they spend their money. Moreover, he believes that Roblox holds its own unique position.

“We need to focus on building passionate communities and getting it right, and then identify the most effective pathways to profit within established systems,” argues the Supersocial CEO. “Wall Street and developers have different priorities. Earnings reports are an important predictor of a company’s success, but as developers, we’re focused on the long-term numbers, not the immediate numbers.”

Increases in daily users and active engagement were highlighted as positive factors the company would like to see, adding that growth in emerging markets was also promising.

“We have never expected to monetize at the same level so quickly, and we are confident that the work we are doing with top brands will not only continue to grow Roblox’s loyalty, but also set a precedent for monetization in the metaverse that will further entrench us as a major user base. I’m sure. Raz-Fridman asserts: