Roblox, (RBLX) like other growth stocks, lately has been under selling pressure. From peak to trough, the shares fell 62.1%. Even after the recent bounce, the stock is still down about 52% from its high last year.
That type of move really crushes sentiment, even if videogames remain in a long-term secular trend.
That’s even as Microsoft (MSFT) scooped up Activision Blizzard (ATVI) in a deal valued at almost $69 billion, proving the M&A catalyst is there at a certain point.
For Roblox stock, investors will have a chance to recoup some of the recent losses when the San Mateo, Calif., company reports after the close.
That said, there’s also the chance that the stock will add to the recent losses if the company can’t deliver.
Cathie Wood was a recent buyer. Should traders be?
Trading Roblox Stock
Chart courtesy of TrendSpider.com
The trading range over the past couple of days has tightened, with the shares bouncing between $66 and $72.
For now, Roblox stock is also holding up over the 10-day and 21-day moving averages. These are encouraging observations but, of course, it will come down to how the stock reacts to the earnings report.
On the upside and the downside, there are clear-cut levels to watch: last week’s high and last week's low.
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If Roblox can break out over last week's high of $73.39, not only will it have cleared the past few days of highs, but it will be at its highest price in almost a month.
To my eye, that could put the key $80 area in play next, which was a pivotal support/resistance area in January.
Above about $80 and the $85 to $87.50 zone becomes key. There, the stock finds the 38.2% retracement, along with the 200-day and 50-day moving averages.
On the downside, a move below $60.91 opens the stock up to a weekly-down rotation. It will also mean that Roblox stock has lost the 10-day and 21-day moving averages.
In that scenario, last month’s low might be in play at $53.79.
Remember: In trading — and particularly around binary events like earnings — it’s a series of “if-then” statements.
So “if” Roblox stock gets to one of the key levels or areas above, “then” let’s see how it reacts to it and move on to the next area of interest.
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