Roblox shares have plummeted nearly 25%. How the company is hampered by security concerns

Shares of the popular gaming platform Roblox fell by almost a quarter on the premarket on May 1 after the announcement of results for the first quarter. The company failed to meet analysts' expectations for audience size: new security features limited access to children, who form the core of the platform, Bloomberg explains. It lowered its full-year order forecast, attributing it to an "aggressive drive to improve security."

Quotes of Roblox fell by 24.9% after it was reported that the number of daily users of the game platform (DAU) did not reach the expectations of Wall Street: the figure amounted to 132 million against the forecast of 143.8 million. Although the result of the first quarter was 35% higher than in the same period last year this is the second time in a row when the company recorded a decline relative to the previous quarter.

In a letter to shareholders, Roblox noted that attracting new users was "held back by greater than expected difficulties due to the implementation of age verification."

Investors were also concerned when the company lowered its full-year forecast for orders, a measure of future sales, from $8.55 billion to $7.6 billion. In the first quarter, orders fell short of analysts' expectations, totaling $1.7 billion versus expectations of $1.73 billion. This prompted the company to lower its full-year estimate as well, given "continued pressure from security factors."

Investments in recommendation algorithms and payments to developers helped Roblox attract millions of players, but increasing cases of child exploitation and inappropriate behavior on the platform have led to lawsuits, investigations and bans in a number of countries. To address these concerns, from January 2026 the company introduced accounts with age restrictions, mandatory age verification and enhanced content monitoring, Reuters writes.

Account holders who fail age verification may be prevented from chatting with others on the platform. By default, Roblox now disables chat for users under the age of 9, Bloomberg notes.

"Since the introduction of age restrictions (...) we have noticed a decrease in engagement in chat rooms. This creates a 'domino effect': content is less likely to go viral, which affects ratings in app stores and other metrics," Roblox CFO Naveen Chopra pointed out in a comment to the agency.

While analysts note that the new measures could complicate the registration process, the company is betting that they will drive growth in the long run, as parents will feel more comfortable allowing their children to use the platform.

Since the beginning of the year, the company's capitalization has fallen 32%, while the S&P 500 broad market index has gained 5.3% in the same time.

At the same time, the majority of analysts tracking Roblox shares remain positive: 25 recommend buying these securities, and nine recommend holding. Only one Wall Street analyst advises to reduce the stake in the company.

This article was AI-translated and verified by a human editor