Are Roblox Shares Priced Right After SEC Case Closes and Stock Surges 127% in 2025?

Thinking about what to do with your Roblox shares? You are not alone. The stock has been a true rollercoaster, showing both huge opportunity and unmistakable risks for investors. Over the past year, Roblox has taken off an incredible 216.5%, and it is up a whopping 126.9% so far this year. Even recent weeks have been positive; the stock is up 3.9% over the past month. For those who have been holding tight, or just watching from the sidelines, it has been an exciting ride.

But why has Roblox been moving the way it has? Sure, the headlines come fast, from major law firms circling with potential lawsuits over exploitation concerns, to the SEC officially closing its case in May, to analysts like JPMorgan raising their price targets. Meanwhile, the core business story keeps evolving. Roblox’s platform engagement continues to hit record highs, and stories of teen developers turning millionaire are everywhere.

With the price near all-time highs at $133.5 per share, a lot of investors are asking whether Roblox is actually undervalued, or if all this optimism is already in the price. According to our valuation scorecard, Roblox is currently undervalued in 0 out of 6 checks, a score of 0. That is not the whole story, though. In the next section, we will dive into exactly how that valuation gets calculated and also explore whether there might be a smarter way to gauge the company’s real value.

Roblox scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Roblox Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and discounting them back to their present value. This approach attempts to gauge the core economic engine of Roblox by considering both where its cash flow is now and where it might realistically be in the years ahead.

Roblox currently reports Free Cash Flow (FCF) of about $721 million. Analysts have offered growth forecasts extending out five years, after which further projections are based on industry estimates. By 2029, these projections expect Roblox’s annual FCF to reach roughly $3.80 billion. Projections for subsequent years show continued growth, although at gradually slowing rates.

Using these projections, the DCF approach estimates Roblox’s intrinsic fair value at $106.65 per share. At the current share price of $133.5, this model suggests the stock is trading at a 25.2% premium compared to what future cash flows might justify.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Roblox.

Our Discounted Cash Flow (DCF) analysis suggests Roblox may be overvalued by 25.2%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Roblox Price vs Sales (P/S) Multiple

The Price-to-Sales (P/S) ratio is often the go-to valuation metric for companies like Roblox, especially when profits are limited or volatile due to high spending on growth. Since Roblox’s profitability is uneven as it continues to invest in building its platform, the P/S ratio helps investors compare its market value directly to its revenue. This provides a clearer sense of investor expectations for future sales growth.

Growth prospects and risk both play a major role in determining what is considered a fair P/S multiple. If investors expect Roblox to grow much faster than its peers with manageable risks, they may be willing to pay a higher multiple. On the other hand, higher risk or slowing growth usually leads to a lower ratio.

Right now, Roblox trades at a lofty P/S multiple of 23.0x. That is well above the Entertainment industry average of just 1.9x and its peer average of 5.9x. However, Simply Wall St’s proprietary Fair Ratio for Roblox, which is based on a blend of factors including its sales growth, industry, profit margins, size, and risks, is 6.2x. Compared to a simple peer or industry average, the Fair Ratio provides a more tailored and realistic baseline by adjusting for company-specific opportunities and challenges.

Comparing Roblox’s 23.0x P/S to the Fair Ratio of 6.2x, the stock appears significantly overvalued on this metric. This suggests that much of the future optimism may already be reflected in the price.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Roblox Narrative

Earlier, we mentioned there is a smarter way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story—the story you believe about a company’s future, including your expectations for revenue, earnings, and margins—which you can connect directly to a financial forecast and a calculated fair value. Instead of just looking at numbers in isolation, Narratives help you link your perspective on Roblox's business fundamentals and trends to an actual estimate of what the stock is worth.

Narratives are easy to use, accessible within Simply Wall St’s platform on the Community page, and trusted by millions of investors worldwide. By creating or following a Narrative, you can compare the fair value that your story produces with the current share price, making it clearer when to buy, sell, or hold. These Narratives automatically update whenever fresh news or earnings data emerges, so your view stays relevant and responsive.

For example, today, some investors see huge potential for Roblox, as reflected in bullish Narratives with price targets as high as $175, backed by rapid international growth and new monetization. More cautious investors, however, are skeptical, with some Narratives setting fair value as low as $62 and focusing on competitive risks and uncertain profitability.

Do you think there's more to the story for Roblox? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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