Shares of Roblox (NYSE:RBLX) are higher on Thursday following Wednesday’s tumble as some analysts upgraded the stock. Morgan Stanley’s Matthew Cost upped his stance on Roblox, shifting from underweight to equal-weight. He felt that while the company faces short-term challenges like a bookings slowdown, there’s potential for growth through avenues like AI and advertisements. Commenting on the financial specifics, Cost acknowledged that Roblox reported a 22% surge in bookings, reaching $780.7M. Yet, the company’s operating loss ballooned to $314M due to escalating costs and expenses.
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Moreover, while the average daily active users rose by 25%, the figure missed Wall Street’s projection by a smidge. The hours users spent on the platform also saw a 24% uptick but again fell shy of estimates. Cost’s eyes are peeled for updates on advertising momentum, AI tool integration, and competitive shifts. He particularly highlighted Fortnite’s latest initiatives as a potential competitive concern. Meanwhile, Nick McKay from Wedbush Securities ramped up his rating on Roblox from neutral to outperform. He mentioned challenges faced in Q2 but emphasized Roblox’s potential growth trajectory, especially given its expansive user base and innovative offerings.
Is Roblox a Buy, Sell, or Hold?
Overall, analysts have a Moderate Buy consensus rating on RBLX stock based on 11 Buys, four Holds, and three Sells assigned in the past three months, as indicated by the graphic above. Nevertheless, the average price target of $41.56 per share implies 37.84% upside potential.
