APAC Expansion And Monetized Content Will Unlock Potential

Roblox's analyst price target has increased from approximately $144 to $148. Analysts cite stronger-than-expected user engagement, impressive bookings growth, and continued investment momentum on the platform.

Analyst Commentary

Recent Street research reflects a surge in analyst optimism surrounding Roblox, with several notable upward adjustments to price targets and an emphasis on both strengths and potential risks for the platform. Below, we outline the major bullish and bearish takeaways from the latest wave of commentary.

• Bullish analysts highlight accelerating user engagement. Platform concurrent user counts are reaching new highs, and major game launches are driving record activity. This suggests potential for robust, sustained growth.
• Recent bookings performance has consistently outpaced expectations, supporting upward revisions to both near-term and long-term financial outlooks.
• The company is demonstrating significant operational leverage. Investments in infrastructure, trust, and safety are expected to moderate while bookings growth remains strong.
• Long-term growth opportunities are seen in product and platform innovation. The rollout of server authority could broaden Roblox’s competitive opportunities and total addressable market.

• Bearish analysts caution that increases in developer share may be one-time events rather than repeatable trends, potentially limiting margin expansion.
• Competitive pressures may force Roblox to further shift economics toward developers over time, putting downward pressure on profitability.
• Uncertainty remains around the sustainability of momentum seen from viral game launches, with some forecasts taking a conservative approach in the second half of the year.
• Regulatory risks, such as ongoing litigation or community tensions, are seen as headwinds. However, recent data has not shown a negative impact on engagement thus far.

What's in the News

• A group of law firms is preparing to file hundreds of lawsuits against Roblox, alleging the platform facilitated child exploitation and grooming of minors. One legal group already has about 300 cases, with expectations that filings could surpass 1,000 by next year (Wired).
• The SEC concluded an investigation into Roblox in May after seven months but did not disclose the nature of the probe or any outcomes. Both Roblox and SEC representatives declined to comment (Bloomberg).
• Roblox contributors are reportedly turning teen game designers into millionaires, with hit games sometimes selling for seven or eight figures. For example, "Blue Lock: Rivals" generated over $5 million a month and was sold for more than $3 million. Platform engagement and user earnings are reaching record highs (Bloomberg).
• JPMorgan raised its price target for Roblox to $125, citing record concurrent users and much stronger than expected bookings growth. Bookings are projected to grow 37% in Q2 and 30% for fiscal 2025, exceeding company guidance (JPMorgan).

Valuation Changes

• Consensus Analyst Price Target: Increased modestly from $143.95 to $148.32, reflecting a slightly more optimistic outlook.
• Discount Rate: Decreased from 8.98% to 8.85%, which suggests slightly lower perceived risk in future cash flows.
• Revenue Growth: Revised upward from 33.5% to 35.1%. This indicates heightened expectations for bookings and overall top-line performance.
• Net Profit Margin: Declined sharply from 9.44% to 0.19%, pointing to much lower anticipated near-term profitability despite growth.
• Future P/E: Increased dramatically from 168.5x to 8,156.3x. This reflects much lower expected profit relative to valuation and indicates highly stretched earnings multiples.