Why Roblox Stock Sank Today

Shares of video game platform business Roblox Corporation (NYSE: RBLX) were down 10% as of 10 a.m. ET on Thursday after the company reported financial results for the third quarter of 2025.

Roblox's management also guided for a bigger loss in the upcoming fourth quarter than what investors wanted to see.

Image source: Roblox Corporation.

Growing the business and widening its losses

On a net-income basis, Roblox is still losing considerable money. In Q3, the company had a net loss of $257 million, which was worse than its net loss of $240 million in the same quarter of last year. And in Q4, management thinks its net loss will increase to at least $345 million, maybe more.

Unfortunately for shareholders, these losses overshadowed otherwise strong numbers in Roblox's Q3 report. Crucial business metrics such as active users, bookings, hours on the platform, and (of course) revenue growth all showed incredible momentum. Specifically, Q3 revenue was up 48% year over year, which is its best growth rate since 2022.

Roblox's business is healthier than today's stock price

It's possible that investors are simply taking some gains off of the table. Even after the drop today, Roblox stock is still up more than 100% in 2025. Its price-to-sales valuation had also jumped to above 20 for the first time since 2022. Investors are likely making moves after looking at the strong recent gains, the pricier valuation, and the guidance for increased losses.

I believe it's important, however, to keep things in perspective. Roblox's daily active users just surged above 150 million -- up 70% year over year -- which strongly suggests that its recommendation engine that's powered by artificial intelligence is working as intended.

Moreover, Roblox is still free-cash-flow-positive even though net losses are there. In fact, the company has nearly $1.2 billion in trailing-12-month free cash flow.

I believe Roblox's business is on the right track. I understand completely why investors are jumpy. But long-term, this business growth could make the stock a winner in spite of its net losses right now.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.