Roblox accused of deceptive marketing: Pro says avoid RBLX


Roblox accused of deceptive marketing: Pro says avoid RBLX

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Wajeeh Khan

Apr 20, 2022 accused Roblox of deceptive marketing in a letter to the FTC.

Carter Worth explains why he would rather stay away from RBLX.

Roblox Corporation is now trading below its IPO price of $45 a share.

Shares of Roblox Corp (NYSE: RBLX) are down nearly 15% after an ad watchdog accused the video game developer of deceptive marketing in a letter to the Federal Trade Commission (FTC).

Carter Worth is bearish on Roblox

Roblox is now trading below its IPO price of $45, which, for Carter Worth, is reason enough to avoid the stock. This afternoon on CNBC’s “Power Lunch”, the founder and CEO of Worth Chartering said:

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It’s a weak stock with an established downtrend. It’s broken its IPO price and the history of stocks that break their IPO price is not good. Basically, they have negative returns on a five-year basis. So, no thanks.

The California-based company is set to report its Q1 results on May 11th. In the prior quarter, its profit and revenue had come in shy of the Wall Street estimates.

Carter Worth sees another problem for Roblox

Roblox could arguably be a key beneficiary of the metaverse, but Carter Worth still sees another risk that could hit the stock in the future as well. Speaking with CNBC’s Kelly Evans, he noted:

30% of the float is tied up by venture capitalists that are stuck with no way out. If they ever were to come out, I think that could be another problem for Roblox Corp.

A day earlier, Goldman Sachs also downgraded Roblox stock to “neutral” citing post-pandemic slowdown and tougher comparisons.

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