Roblox’s Rocky Tuesday

Roblox reported Q4 2021 earnings today, annnd… they probably wish they didn’t have to. 😬 Here’s what happened:

Bookings: $770.1 million, +20% YoY (analysts expected $772 million)
Revenue: $568.8 million, +83% YoY 
Loss per share: $0.25 adjusted (analysts expected a loss of -$0.13)

Roblox uses Bookings to represent a commitment to spend money. Revenue realizes the actual commitment as spent. A good example of how this works, practically speaking, is when a user buys Robux (the game’s in-game currency.) Once users spend that money, the Booking is assigned as Revenue. 💡

Revenue is the actual figure that Roblox weighs against its losses. Because of that, the company’s $708 million worth of costs and expenses well outweighed its $568.8 million in revenue. Although that loss is probably disappointing, Roblox’s loss actually narrowed YoY. The company’s biggest costs were Research and Development (24.5% of costs) and Developer exchange fees (22.5% of costs.) That said, most sources of Roblox’s costs and expenses were pretty balanced, with the exception of sales and marketing (which was significantly less than the other categories.)

Losses aside, Roblox’s Bookings growth slowed significantly in Q4 2021. Bookings came in about $1.9 million lower than analysts expected, which is one reason Roblox stock responded with a violent drop. 📉

The other reason for the drop? Bookings are usually a leading indicator of Revenue, and the company’s key metric estimates from January 2022 are alarming. Roblox’s bookings figure for the month was up just 2-3% YoY, presumed to be $220-$223 million. 🚨 These figures indicate that Roblox’s revenue is about decelerate rapidly. 

Hopefully that’s just how thinks look — a trend, not reality. There are still two more months in Q1, so it’s possible Roblox could see a vicious uptake in post-pandemic spending on its platform from its 55 million daily active users. Roblox better hope for that, because today’s selloff was no laughing matter. 🤭

$RBLX fell 12.7% in afterhours.

If you’re a multi-billion dollar semiconductor giant and you don’t get your way, then… try try again. 😅

That’s what Intel, that company that has bounced out of two rumored M&A negotiations in recent months, is doing. Today, Intel managed to actually buy something — Tower Semiconductor, to be specific, in a $5.4 billion deal. 💰 💰

Intel will pay $53 per share for the Israeli chipmaker in a bid to bolster its “manufacturing capacity and technology portfolio amid rising demand.” Tower makes semiconductor products used in vehicles, consumer products, industrial equipment, and medical equipment, and the company has facilities in Israel, California, Texas, and Japan.

That footprint is attractive for Intel, which has fallen on hard times during the pandemic. Intel has been sad for the greater part of the “chip shortage,” moving to the downside while market leaders like $TSM and $NVDA capture the upside. 🤷

The American chipmaker was once the market leader in the U.S. for CPU chips (namely, x86 chips), but its former power has been challenged by the once-again rising star $AMD, 🌟 which Intel attempted to kill more than a decade ago by engaging in unfair competition with manufacturers.

The suit cost Intel over a billion dollars and prompted a years-long legal battle, famously ending with a trip to the Supreme Court. To make matters worse, Intel is falling on even harder times because of $AAPL‘s decision to preference its own in-house chipset. These two factors are doing to Intel what the Millennials did to the McDonald’s Premium McWrap (spoiler: killed it.) 🔪

Jokes aside, Intel is fine, but the company has definitely seen better days. $INTC is down 22.5% in the last year, analysts are overwhelmingly neutral about it, the company’s YoY growth fell 4% in 2021, Intel expects little growth in 2022, and its P/E is priced for more downside.

All of that said, the company has been investing in expanding its capacity and product options in hopes of bringing those revenues a much-needed shot in the arm. Last month, Intel unveiled plans for a new $20 billion chip factory outside Columbus, OH. Just last week, the company announced a blockchain-centric compute chip.