Stocks in the gaming development sector are in free fall. Roblox (RBLX) lost around $10 a share, closing at $31.45 last week. Markets should consider Roblox and Unity (U) as middle-aged technology firms that have yet to make money.
Roblox posted $800 million in revenue but lost $0.43 in EPS. In Q2, revenue is up to $880 million but it will lose $265 million - $267 million.
Unity fell by 10.22% last Friday after losing $0.85 a share. Its conference call failed to offer any insight. Analysts asked concrete questions about share dilution and revenue growth opportunities.
Beyond Meat (BYND) and GameStop (GME) are indicators that the stock market is too frothy. Shorts panicked when Beyond Meat posted a -$0.72 EPS on revenue of $75.6 million (-18%). Avoid the stock. Sales will continue to weaken while gross margins worsen.
Peloton (PTON) added 21.5% in the last week, likely on a short squeeze. Irrational rumors of a buyout lifted the stock. No amount of research and development cost-cutting will save the company. People may buy a real bike and exercise outdoors instead.
Airbnb (ABNB) is the only potentially hot stock. After its dip, the stock is due for a rally back to $160. ABNB closed at $146.32 on May 10.
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