Editor's note: Smart investing isn't just about finding winners. You also need to sidestep the collapses. In this issue, Ethan Goldman of our corporate affiliate Chaikin Analytics explains how the Power Gauge flagged trouble in a red-hot video-game stock before it tumbled. And he explains why this system is still cautioning against the gaming industry as new AI threats emerge...
Also, the markets and our offices will be closed on Monday in observance of Presidents Day. So keep an eye out for your next issue of DailyWealth on Tuesday, February 17, after the Weekend Edition.
The only thing more important than the stocks you own is the stocks you don't own...
Everyone wants to find stocks poised to soar. But for long-term investing success, it's also critical to avoid the traps.
A few months ago, we warned that a company nearing a double was on the verge of a breakdown.
This video-game platform is a big hit. Both kids and adults across the globe are hooked to the seemingly endless choices the platform provides.
But it also comes with a history of volatility. In the nearly five years since it went public, we've seen huge gains... wiped away by quick pullbacks.
This time, the stock had more than tripled. But our system spotted that another breakdown was coming for this popular stock...
Back in October, I noticed that the Power Gauge changed its tune on video-game platform Roblox (RBLX).
The Power Gauge is a tool we use at Chaikin Analytics to analyze the markets. It gathers investment fundamentals and technicals into a simple rating of "bullish," "neutral," or "bearish."
Roblox's platform lets gamers around the world connect in virtual games – or as the company calls them, "experiences."
But Roblox itself doesn't make the games. Users can design and code their own games using the company's proprietary engine.
At the time, Roblox had soared by an incredible 206% over the past 12 months.
Naturally, the Power Gauge rated the stock as "bullish" during the bulk of that growth.
However, I also shared Roblox's history of rapid growth and losses...
The stock grew 94% in the first eight months the company publicly traded. Then, it collapsed by 83% over the following six months.
During its recent growth wave, the "smart money" on Wall Street supported Roblox. But that support reversed in late 2025... And we caught it thanks to the Power Gauge.
Given Roblox's volatile history and warnings from the Power Gauge, it wasn't hard to predict what the stock was about to do...
The Smart Money Flees Roblox as Its Share Price Sinks
Since October 13, Roblox is down nearly 50%. And the big-name investors on Wall Street have continued moving their money out of the stock.
Take a look at the chart below...
You'll see that Roblox's stock plummeted in late October. By the end of the month, its relative strength versus the S&P 500 Index turned negative.
As Roblox continued to fall, the Power Gauge flashed sell alerts for the stock. The first one came on December 10, 2025. That's right around when Roblox fell into "bearish" territory in our system.
As you can see, the stock kept falling after the rating change. Today, Roblox earns a "very bearish" overall grade in the Power Gauge.
Remember, Roblox lost 83% of its value during its first plunge. Given the "very bearish" rating right now, I won't be surprised if the stock continues to fall.
Of course, I also said the stock has a history of rapid gains. But the video-game industry recently caught a new headwind that could postpone another spike in Roblox's value...
A Tech Titan Sows Chaos in the Video-Game Industry
In late January, Alphabet's (GOOGL) Google rolled out access to a new AI model. It calls this new model Genie 3.
Here's the exact description from the Genie 3 website...
Genie 3 is a general-purpose world model. It uses simple text descriptions to generate photorealistic environments that can be explored in real-time.
Put simply, Genie 3 is a major step in AI use in video-game development. Google even touts it as a "key stepping stone on the path to AGI [artificial general intelligence]."
AGI is a way to describe an AI model that can match humans at anything.
Of course, that means video-game development as well.
Genie 3 does have some limitations. But its release further spooked Roblox investors...
The stock dropped 13% in a single day after the Genie 3 announcement. Other video-game stocks also took a major hit...
Take-Two Interactive Software (TTWO) dropped about 8%. And Unity Software (U) – which creates software for game developers – collapsed by roughly 24%.
We saw how fast AI advanced in 2025. And it's impossible to fully predict what the future of the technology holds.
But when it comes to Roblox's stock, we don't need to take wild guesses...
The Power Gauge previously flashed clear warning signs. And it's still saying to avoid the stock right now.
Good investing,
Ethan Goldman
Editor's note: Chaikin Analytics founder Marc Chaikin is warning that a major AI "reset" is approaching. He says less than 2% of stocks are positioned to thrive. But if you know where to look, you could also double your portfolio as this industry rupture unfolds. On Tuesday, he'll explain how to spot the biggest potential earnings beats before they happen.
Further Reading
"The zero-trust online future will look very different from the web we know today," Sean Michael Cummings writes. Digital scams are exploding with the emergence of AI. That sounds scary – but it's also creating massive demand for protection, verification, and trusted brands.
Tesla isn't trading on car sales anymore – it's trading on hype. Production is slipping. Competition is rising. Yet the stock still trades near its all-time highs. In moments like this, separating story from substance matters more than ever.
