Thursday, March 23, 2023
HomeMarketRoblox Won Over a Wall Street Bear. The Stock Still Dipped.

Roblox Won Over a Wall Street Bear. The Stock Still Dipped.

Roblox offers a platform that lets users create and interact in virtual worlds.

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Courtesy Roblox

‘s latest earnings report sent shares surging earlier this week. The report also convinced a bearish analyst on Thursday to move to the sidelines.

Benchmark analyst Mike Hickey upgraded Roblox stock (ticker: RBLX) to Hold from Sell in a Thursday note. He also pulled his $21 target because Benchmark doesn’t assign targets to Hold-rated stocks.

Roblox offers a platform that lets users create and interact in virtual worlds. Creators on the platform can sell digital goods. Roblox’s users are predominantly children and teenagers.

Roblox shares soared 26% on Wednesday after the firm reported better-than-expected fourth-quarter results. The stock was down 3.5% in Thursday trading, following Hickey’s upgrade. Hickey notes that Roblox provided January figures that showed continued momentum.

“[Roblox] appears to have worked through the pandemic influence on their business and has been seemingly immune to current macroeconomic pressure on consumer spend,” Hickey wrote. “We note what appears to be a stabilizing mobile game market that could be a compelling developing trend.”

Hickey wrote that he is optimistic about the firm’s decision to rein in investment spending, but he isn’t completely sold on the stock.

“We are cautious on ambitious growth initiatives including advertising schemes focused on children that extend beyond core game play and could lead to increased regulations,” he wrote. “We think RBLX will continue to appeal primarily
to young children, and most will age out when they become teenagers. We believe a lot of kids will embellish on their age, which can skew the average.”

Hickey wasn’t the only analyst to weigh in on Roblox Thursday. Barclays analyst Mario Lu maintained an Underweight rating but raised his price target to $28 from $21.

“Bookings and user growth from the 17 to 24 year old cohort was equally impressive despite the strong performance of console titles such as Call of Duty Modern Warfare 2 in the December quarter,” Lu wrote, referring to competition from
Activision Blizzard
‘s (ATVI) latest hit title in the Call of Duty series. “Stepping back from the print, we believe RBLX could be one of the main beneficiaries of the current meta with AI generative technology as it pertains to content development within the platform, though wide stream adoption is likely still a few years away.”

Still, Lu thinks the firm’s spending is worth monitoring. He also thinks the stock is pricey, trading at seven times estimated fiscal 2024 bookings.

Write to Connor Smith at


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