Shares of Roblox (RBLX) are trading lower on Wednesday after the online gaming company reported May daily active users of 43M, up 28% from May of last year but down 1% from April. Roblox also said that average bookings per daily active user are expected to be down 2%-3% year-over-year. Despite the news, Wall Street analysts kept they bullish ratings on the stock, with Morgan Stanley analyst Brian Nowak lowering his second-quarter estimates but saying the long-term view remains unchanged.

USAGE RATES: Roblox has released its May 2021 key metrics. The company said its daily active users were 43.0M, up 28% from May of last year and down 1% from 43.3M in April 2021. Hours engaged were 3.2B, up 9% year-over-year and up 1% from 3.2 billion in April 2021. Bookings are estimated to be between $216M-$219M, up 24%-26% year-over-year. Average Bookings per DAU are estimated to be between $5.02-$5.09, down 2%-3% year-over-year. Revenue is estimated to be between $149M-$151M, up 123%-126% year-over-year.

SHARES LIKELY RANGE-BOUND: Noting that Roblox shares are trading down after its May daily active users declined 1% month-over-month, JPMorgan analyst Alexia Quadrani says this is consistent with her modeling but notes that the average bookings per daily active user decrease was more than expected. Taking the average reported figure for April and May, and assuming flat performance into June, would imply bookings for the second quarter at $679M, below the consensus at $683M, Quadrani contended. She admitted, however, that this extrapolation may be "generous," given the company's June 2020 bookings were down an estimated 3% month-over-month. Quadrani's long-term view on Roblox remains positive but she believes the shares are likely to be range-bound given a lack of catalysts until June data is published in mid-July and as the Street continues to monitor the extent of the slowdown during reopening/back to school over the next few months. The analyst kept an Overweight rating on Roblox.

Also commenting on the news, Stifel analyst Drew Crum said that May Key Performance Indicators, or KPIs, were "directionally consistent with the historical trendline" for the calendar second quarter and his internal assumptions. While his view on the quarter and bookings estimate are unchanged, the data are "probably not enough to sustain the upward momentum the shares have enjoyed recently." Further, his "sense" is the market may have been looking for more. The analyst has a Buy rating and $90 price target on Roblox shares.

MAY TYPICALLY A DOWN MONTH: Truist analyst Matthew Thornton also kept a Buy rating and $103 price target on Roblox after the company's May key metrics disclosure, featuring "fairly stable" Daily Active User and Engagement data but a "softer than expected" set of bookings per DAU and total bookings, which fell 10% and 11% sequentially. The analyst argued that Roblox has already indicated that May is typically down on sequential basis seasonally before a bounce in the month of June, adding that in order for the second quarter to reach bookings consensus, June will have to be up about 6% from May.

LONG-TERM VIEW UNCHANGED: Noting that Roblox's bookings, DAUs, and hours engaged decelerated versus April, Morgan Stanley analyst Brian Nowak lowered his second-quarter and full-year 2021 bookings estimates by 4% and 1%, respectively, to reflect modestly lower bookings per user growth reported in May and expected in June. However, his full-year 2022 estimates are unchanged as is his core thesis on multi-year user and monetization growth. Nowak maintained an Overweight rating on Roblox shares, with a price target of $87.

PRICE ACTION: In Wednesday morning trading, shares of Roblox have dropped about 7% to $83.28.