Is it too late to buy Roblox stock as shares spike 33% after its Q3 beat?

On Tuesday, Roblox Corp (NYSE:RBLX) shares surged more than 33% after announcing its most recent quarterly results. The company reported its fiscal third-quarter results Monday after markets closed, beating analyst expectations on bookings. However, although its quarterly revenue more than doubled from last year, it still came short of the consensus analyst estimate.

Roblox said booking for the quarter increased by 28% from the same quarter in 2020 to $637.8 million, beating the average analyst estimate of $624 million. On the other hand, its GAAP earnings per share -$0.13 outperformed the expectation of -$0.14, while revenue soared 102.2% to $509.3 million, missing the consensus Street estimate by $127.17 million.

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The stock is now up 47.53% since going public in March.

Is it too risky to buy Roblox shares?

From an investment perspective, Roblox shares trade at steep P/S and P/B ratios of 44.42 and 111.32, respectively. Therefore, value investors could find it less exciting to buy after Tuesday’s sharp spike.

In addition, analysts expect its earnings per share to plunge by 256% this year before bouncing back slightly by 15.30% next year. As a result, growth investors could also opt for alternatives in the market.

Therefore, it may be too late to buy the stock after surging to set new all-time highs.

Technically, Roblox shares seem to have recently spiked to complete an upward breakout from a descending channel formation, creating a bullish price gap. As a result, the stock has rallied deep into overbought conditions, creating an opportunity for a pullback.

Therefore, investors could target short-term downward profits at about $94.43, or lower at $84.17. On the other hand, if the rally continues, the stock could find resistance at about $110.35, or higher at $120.47.

It could be time to take some profits

In summary, given Roblox’s recent spike in the stock price, it could be a perfect time for profit-takers to swoop in. 

The RBLX stock price has already moved into overbought conditions, thus limiting its short-term upside potential.

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