TLDR
- Roblox (RBLX) closed at $131.79, gaining 2.58% and outperforming the S&P 500’s 0.27% rise
- Oppenheimer maintains Outperform rating with $158 price target following the Roblox Developers Conference
- Expected Q3 earnings show -$0.44 EPS (down 18.92%) but revenue projected at $1.63 billion (up 44.72%)
- Company’s DevEx rate increased to 23.4% from 21.6%, showing improved developer payouts
- New advertising strategy focuses on both brand and programmatic approaches for future revenue growth
Roblox stock climbed 2.58% to close at $131.79 in Monday’s trading session. The gaming platform outperformed the broader market, with the S&P 500 gaining just 0.27%.
The stock has faced some headwinds recently, dropping 1.74% over the past month. This performance lagged the Consumer Discretionary sector’s 6.14% gain during the same period.
Oppenheimer kept its Outperform rating on the stock following last week’s Roblox Developers Conference in San Jose. The firm maintained its $158 price target, representing upside from current levels.
The investment bank reported an “incrementally positive” outlook after meeting with company executives and developers at the conference. They believe Roblox can gain market share through new technology and product innovation.
Advertising Push Takes Center Stage
Roblox is building what could become a substantial advertising business over time. The company plans to use both brand advertising and programmatic approaches to create new revenue streams.
Oppenheimer noted this dual strategy could help the platform monetize its massive user base more effectively. The firm sees long-term growth opportunities in interactive entertainment and advertising.
However, near-term challenges remain. Advertising revenue will make an “immaterial” contribution to bookings growth in the immediate future, according to analysts.
The company also faces what Oppenheimer called “incremental concentration risk” as it expands its business model. This suggests some uncertainty around execution in the short term.
CEO Dave Baszucki announced an increase in the company’s DevEx rate to approximately 23.4%. This metric shows how much developers earn from the platform, up from 21.6% over the past twelve months.
Earnings Picture Shows Mixed Signals
Wall Street expects Roblox to report third-quarter earnings per share of -$0.44. This represents an 18.92% decline from the prior-year quarter.
Revenue projections paint a brighter picture. Analysts forecast net sales of $1.63 billion, marking 44.72% growth year-over-year.
For the full year, consensus estimates project losses of -$1.71 per share. Revenue is expected to reach $5.98 billion, up 36.98% from the previous year.
BofA Securities recently raised its price target to $171 from $159, maintaining a Buy rating. Needham also kept its Buy rating with a $159 target price.
BMO Capital reiterated its Outperform rating with a $150 price target. The firm cited strong user growth, with average daily peak concurrent users up 123% year-over-year in Q3.
Roblox announced a partnership with the International Age Rating Coalition for a global content rating system. This replaces existing labels with region-specific ratings.
The Gaming industry currently holds a Zacks Industry Rank of 86, placing it in the top 35% of all industries. Roblox maintains a Zacks Rank of #3 (Hold).
The company launched “Moments,” a new feature that could boost user engagement and in-app purchases. This addition reflects ongoing efforts to enhance the platform experience.
Oppenheimer also maintained its Outperform rating after meeting with prominent game streamer KreekCraft, showing continued confidence in the platform’s creator ecosystem.
