Roblox Corporation shares tumbled 13.83% in pre-market trading on Friday, extending a sharp sell-off that began in Thursday's after-hours session following the release of disappointing second-quarter results and a significantly weaker-than-expected third-quarter outlook.

The gaming platform reported Q2 revenue of $1.47 billion, missing the consensus estimate of $1.6 billion. While the company's adjusted loss of $0.26 per share beat expectations for a loss of $0.34, the top-line miss and bleak forward guidance overshadowed the bottom-line beat. For the third quarter, Roblox projected revenue growth of just 4% to 10% year-over-year, to a range of $1.41 billion to $1.49 billion, while bookings are expected to decline 14% to 18% to between $1.58 billion and $1.65 billion. Both figures fell well short of Wall Street forecasts, with analysts having expected around $1.87 billion for both metrics.

The weak guidance reflects a confluence of platform changes that are creating near-term pressure on monetization. Roblox has been rejiggering its recommendation algorithm to prioritize games that retain users over those with stronger monetization, which weighed on bookings in the latest quarter. At the same time, tougher age-verification measures have added friction to user onboarding and engagement. The company also surprised investors by withdrawing its full-year outlook and transitioning to quarterly-only guidance earlier than scheduled, citing the variability of its business and the timing of its investments. CFO Naveen Chopra acknowledged that monetization weakness is likely to continue, though management expressed conviction that the strategy of investing in AI, safety, and retention will maximize the company's share of the gaming market over the long term.