Last Update 02 Dec 25

Fair value Decreased 0.27%

RBLX: Expanding Advertising and Rewarded Video Will Unlock Major Upside Ahead

The analyst price target for Roblox has been modestly revised downward to $145.63 from $146.02. Analysts continue to see strong top-line momentum but point to increased investments and a softer margin outlook in the near term.

Analyst Commentary

Recent research notes indicate diverging opinions on Roblox, as analysts weigh robust engagement trends and new monetization avenues against growing investment requirements and a cautious margin outlook. The consensus price target reflects both the company’s near-term headwinds as well as its long-term growth potential as a leading user-generated content platform.

Bullish Takeaways

Bullish analysts point to consistent acceleration in key performance indicators, with record high concurrent users and growing platform engagement. This suggests healthy upside to management’s guidance.
The introduction of new advertising units and rewarded video features are viewed as multi-billion dollar opportunities, with the potential to turn presently unmonetized engagement into meaningful margin gains.
Continued investment in AI-driven search, discovery, and global content diversity is cited as fueling new viral experiences and expanding Roblox’s addressable market.
Platform improvements, such as greater infrastructure capacity and competitive gameplay enhancements, are seen as positioning Roblox favorably against peers and bolstering its long-term growth trajectory.

Bearish Takeaways

Several analysts remain cautious about margin compression in the near term and attribute it to increased infrastructure spending and higher payouts to developers as the company expands its network effects.
Some believe the recent sharp selloff in shares reflects ongoing market concern over 2026 guidance, especially with a level of conservatism reportedly included in management’s commentary.
Slowing bookings growth in core U.S. markets has tempered enthusiasm and raised questions about the sustainability of outsized user and revenue gains abroad.
Analysts note competitive pressures may force Roblox to further shift economics towards creators, which could moderate the pace of operational leverage and profit growth in the years ahead.

What's in the News

Roblox is set to report quarterly earnings, with analyst consensus forecasting a loss of $0.50 per share (Notable companies reporting before tomorrow's open).
Lionsgate and partners have launched The Strangers: Chapter 2, an immersive survival horror experience across several popular Roblox games. This release is timed for the peak Halloween season and features unlockable virtual rewards.
Mattel is expanding its partnership with Roblox to release new experiences based on iconic brands like Monster High, Barbie, Hot Wheels, and UNO. Official licensed assets are now available for creators.
Roblox has partnered with the International Age Rating Coalition (IARC) to introduce region-specific age and content ratings. This initiative aims to enhance safety and clarity for users and parents worldwide.
A lawsuit alleges Roblox’s platform failed to provide adequate child safety protections, amplifying scrutiny on the company’s commitment to user security and moderation practices.

Valuation Changes

Consensus Analyst Price Target has decreased modestly from $146.02 to $145.63.
Discount Rate has edged down slightly from 9.07% to 9.05%.
Revenue Growth projections have risen from 35.72% to 36.27%.
Net Profit Margin estimate has fallen significantly from 2.29% to 1.39%.
Future P/E ratio has increased sharply from 604.1x to 979.7x.

International expansion, localization, and platform improvements are fueling rapid global user growth and increasing engagement, broadening Roblox's revenue potential.
Enhanced monetization tools and a growing older user base are unlocking new, higher-margin revenue sources and strengthening long-term topline growth prospects.
Escalating costs, dependence on viral content, and competitive pressures risk long-term profitability if user growth and monetization fail to match heavy investments and expansion ambitions.

Catalysts

About Roblox

Operates an immersive platform for connection and communication in the United States and internationally.What are the underlying business or industry changes driving this perspective?

International expansion and localization initiatives-especially enhancements in auto-translation and server infrastructure-are driving rapid user growth in APAC and other regions (e.g., 75%+ bookings growth in APAC, 120%+ in Korea, 150%+ in Indonesia), broadening the addressable market and increasing global revenue potential.
Advancements in platform infrastructure, scalability, and AI-driven content tools are reducing barriers for creators, fueling an acceleration of user-generated content and viral hits; this strengthens engagement, increases DAUs, and supports long-term growth in transaction-based revenue and average bookings per user.
The evolving digital economy on Roblox, including expanded monetization opportunities like digital goods, Rewarded Video ads, and a systematized IP licensing marketplace, is expected to unlock new high-margin revenue streams and enhance net margins as adoption matures.
Success in increasing the share of older users (with 64% of DAUs over 13, and viral hits skewing older) positions Roblox to tap into higher-monetizing demographics, supporting higher ARPU and improved topline growth prospects.
Continued investment in discovery and personalization algorithms increases user retention and cross-experience engagement (e.g., 75% of viral hit users engaging with other experiences in the same day), which supports sustainable gains in user lifetime value and future earnings.

Roblox Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Roblox's revenue will grow by 33.5% annually over the next 3 years.
Analysts are not forecasting that Roblox will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Roblox's profit margin will increase from -23.7% to the average US Entertainment industry of 9.4% in 3 years.
If Roblox's profit margin were to converge on the industry average, you could expect earnings to reach $903.3 million (and earnings per share of $1.11) by about September 2028, up from $-952.3 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 168.5x on those 2028 earnings, up from -97.2x today. This future PE is greater than the current PE for the US Entertainment industry at 38.2x.
Analysts expect the number of shares outstanding to grow by 5.64% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.98%, as per the Simply Wall St company report.

Roblox Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Sustained rapid expansion in developer and content payouts (DevEx up 52% YoY and focus on shifting more top-line dollars to creators) could compress net margins if platform monetization or user growth fails to keep pace, impacting long-term profitability.
Heavy CAPEX investment and ongoing requirements to scale global infrastructure, localization, and safety features-including unique efforts around security (RoGuard, Trusted Connections) and cloud infrastructure-pose risks of escalating fixed costs and may pressure earnings if viral hits or user growth normalize, especially as the management noted conservatism in extrapolating Q2 trends.
User acquisition surges have been driven by a small number of viral experiences, and management is cautious about the durability and repeatability of these hits; a reversion to baseline engagement or fewer blockbuster titles could lead to slower revenue and bookings growth, risking topline expansion forecasts.
Roblox's long-term goal of capturing 10% of the global gaming content market is highly ambitious and dependent on continued success in genre, geographic, and demographic expansion; failure to age up the platform or extend appeal beyond younger users would constrain addressable market growth and limit average revenue per user, putting pressure on revenue growth.
Intensifying platform competition (from global gaming incumbents advancing in immersive tech or new metaverse platforms) and the need for constant innovation in content moderation, safety, and regulatory compliance may require increasing operational expenses, potentially eroding operating leverage and elevating risks to long-term net margins and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $143.95 for Roblox based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $175.0, and the most bearish reporting a price target of just $62.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $9.6 billion, earnings will come to $903.3 million, and it would be trading on a PE ratio of 168.5x, assuming you use a discount rate of 9.0%.
Given the current share price of $133.46, the analyst price target of $143.95 is 7.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

RBLX: Expanding Platform Engagement And Growing Developer Incentives Will Drive User Upside