Last Update 21 Jan 26

Fair value Decreased 8.32%

RBLX: Expanding Advertising And Rewarded Video Will Drive Future Upside Potential

The analyst price target for Roblox has been reduced by about $12 to reflect slightly lower fair value, modestly softer growth and margin assumptions, and a recalibration of long term P/E expectations, even as recent research highlights healthy bookings, encouraging engagement trends, and ongoing content and ads opportunities.

Analyst Commentary

Recent research on Roblox reflects a mix of optimism around engagement, bookings and new revenue streams, alongside concerns about the investment required to support that growth and the impact on margins and valuation multiples.

Bullish Takeaways

Bullish analysts point to what they describe as healthy Q4 bookings and encouraging stabilization in engagement trends, which they see as supportive of Roblox's ability to sustain its user and spending base.
Some see the steady flow of new hit experiences, such as "Escape Tsunami" quickly climbing the internal charts, as evidence that the platform continues to surface fresh content, which they link to support for future engagement and bookings potential.
Advertising is seen as a meaningful upside lever, with rewarded video framed as an approximately US$3b opportunity and sponsored tiles flagged as a possible driver of margin benefits over time, especially given that much of current engagement is not yet monetized.
A few bullish analysts also argue that investments in developers and infrastructure, including higher DevEx and capacity spending, could strengthen Roblox's position as a go to platform for independent creators, which they view as important for long term network effects and competitive positioning.

Bearish Takeaways

Bearish analysts have cut price targets by wide ranges, with some trims tied to lower Q4 bookings expectations, reduced 2026 and beyond estimates, and a reset of long term valuation assumptions including P/E multiples.
Several firms highlight that commentary around 2026 growth and margins has disappointed investors, with planned increases in infrastructure spend and higher DevEx rates seen as potential drivers of a year over year operating margin decline depending on bookings performance.
One bearish group references a slower December in their Q4 bookings assumptions and lower long term bookings forecasts, which they see as warranting a more cautious view on execution against prior growth expectations.
Even among those keeping positive ratings, the reduction in targets and acknowledgement that prior estimates may have underappreciated the difficulty of future content cycles suggest that some analysts see risk to near and medium term earnings power relative to earlier models.

What's in the News

New York Governor Kathy Hochul is seeking to extend age verification rules to online gaming platforms such as Roblox, with a proposal that would default child accounts to high privacy settings, restrict contact from unknown users, disable AI chatbots for kids, and give parents tools to limit spending, as part of the New York Children's Online Safety Act (The Verge).
Roblox is included on a list of companies scheduled to report earnings before the market open, with a consensus forecast of a loss of US$0.50 per share (earnings calendar item).
Universal Music Group and Roblox announced a new agreement focused on music and commercial integrations, including Shopify powered digital and physical merchandise, streamlined tools for artists and labels, and a series of upcoming artist activations starting with Stray Kids, with a shared focus on responsible AI use (company event summary).
Roblox released its 2025 Roblox Replay, highlighting usage patterns such as frequent avatar updates, high daily search volumes and strong interest in digital fashion. The report describes Roblox as a global hub for identity, creativity and cultural trends (company report summary).

Valuation Changes

Fair Value: reduced from US$145.63 to US$133.52, a modest cut in the modelled equity value per share.
Discount Rate: adjusted slightly lower from 9.05% to 8.96%, reflecting a small change in the required return assumption.
Revenue Growth: trimmed from 36.27% to 35.73%, implying slightly more conservative expectations for revenue in the model.
Net Profit Margin: reduced from 1.39% to 1.31%, pointing to a small downward revision in long term profitability assumptions.
Future P/E: lowered from 979.70x to 966.82x, indicating a minor reset in the assumed valuation multiple applied to future earnings.

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