Roblox Loses Over $ 1.5 Billion In Market Cap Following Outage That Could Cost Millions
Roblox Corp. withdrew from a three-day outage Monday that excluded millions of users, as investors wiped out more than $ 1.5 billion in the video game company’s market cap.
Roblox RBLX,
shares fell 4% on Monday and closed 3.4% lower at $ 81.14, after the company restored service to millions of users in an outage that began last Thursday and has been resolved on Sunday. With 575 million shares outstanding, Monday’s decline wiped out $ 1.66 billion in market capitalization.
Based on Roblox’s latest quarterly report, the company grossed $ 454.1 million, so three days of that would represent a loss of revenue of around $ 15 million. Roblox last reported that 46.6 million people use the platform daily, and some of those users are also making income from offering their own in-game experiences or products.
In a blog post published on Sunday, Roblox chief executive David Baszucki said the outage was “particularly difficult” because it involved a “combination of several factors”.
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“A central system in our infrastructure was overwhelmed, caused by a subtle bug in our backend service communications while under heavy load,” said Baszucki. “It wasn’t due to a spike in external traffic or any particular experience.”
In a Monday morning note, MKM analyst Mike Hickey said it was important that Roblox made the distinction that the outage was not due to any factor, as many users suspected a Halloween “Boorito event. “on the platform involving a giveaway of $ 1 million in free burritos from Chipotle Mexican Grill Inc. CMG,
was at fault.
“Rather, the failure was caused by the growth in the number of servers in our data centers,” Baszucki said in the blog post. “The result was that most of Roblox’s services were unable to communicate and deploy effectively. “
Baszucki said the company will issue a “post-mortem” of the outage once its analysis is complete.
On Monday, a Roblox spokesperson confirmed to MarketWatch that the company has no further details to share outside of Baszucki’s blog post.
Roblox is then expected to release its quarterly results on November 8. The shares are 80% above their benchmark price of $ 45 set in March when the company’s shares started trading.