Roblox shares plummet 18% as child safety measures weigh on bookings

Roblox Corporation saw its shares drop by 18% on Friday following the release of its first-quarter earnings, which highlighted the negative impact of new child safety measures on its bookings. CEO David Baszucki addressed the situation during an appearance on CNBC's "Squawk Box," stating that the implementation of an age-check system is a crucial step for the long-term development of the platform. In a letter to shareholders, the company explained that the age-check feature has resulted in limitations on communication for users who have not completed the verification process. This has diluted the messaging experience for those who have verified their age and hindered the acquisition of new users, which created unexpected challenges. As of January 31, 73% of daily active users who had undergone age verification were under the age of 18, with 35% being under 13. In light of the slower than anticipated growth, Roblox has revised its bookings forecast for the full year 2026, projecting figures between $7.33 billion and $7.6 billion. This marks a significant decrease from the previous estimate, which had ranged between $8.28 billion and $8.55 billion. Despite the challenges posed by its safety initiatives, Roblox's first-quarter performance exceeded Wall Street expectations, reporting a loss of 35 cents per share, which was better than the anticipated loss of 41 cents. The company's revenue for the quarter reached $1.73 billion, slightly surpassing analysts' predictions of $1.72 billion. Roblox is currently contending with over 140 lawsuits filed in U.S. Federal Court, alleging that the company has not adequately protected children from sexual exploitation. Recently, the firm settled claims with Alabama and West Virginia, agreeing to pay a total of $23.2 million. Additionally, the company has rolled out new account types aimed at younger users and has expanded parental controls to enhance user safety.