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On Monday, TD Cowen reiterated its Sell rating on Roblox Corp . (NYSE:RBLX) with a consistent price target of $40.00. According to InvestingPro data, the stock is currently trading near its 52-week high of $96.28, with technical indicators suggesting overbought conditions. The stock has delivered an impressive 168.87% return over the past year, though current valuations appear stretched based on InvestingPro’s Fair Value analysis. The firm noted a slight downturn in the trajectory of the user base for Roblox’s game "Grow a Garden" (GaG) following a period of robust viral growth since its release in March. The game experienced a steady increase in concurrent users (CCUs), adding approximately 600,000 average weekly CCUs during May, starting from a few hundred thousand and reaching a peak seven-day average of 2.3 million on June 3. As of June 7, however, there was a decline of 115,000 CCUs from that peak.
Despite this recent dip, TD Cowen has expressed no change in its stance on the future growth trajectory of GaG. The firm pointed out that predicting the game’s performance over the coming weeks would be speculative, especially considering the impending summer break for children in the U.S. and Europe, which could potentially spark another surge in growth. Nonetheless, the firm underscored the importance of this recent trend break, given that Roblox shares had previously climbed to the mid-$90s.
TD Cowen also highlighted its expectations for Roblox’s overall financial performance, projecting a low-30% year-over-year bookings growth in the second quarter. InvestingPro data shows the company’s revenue growth forecast for FY2025 stands at 49%, though profitability remains a concern with negative earnings per share of $1.34 over the last twelve months. For deeper insights into Roblox’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. This projection comes amid the observed leveling off of GaG’s growth, as the firm remains cautious about making any definitive claims regarding the game’s future performance.
The firm’s Sell rating on Roblox indicates a cautious stance on the stock, despite the game’s initial strong performance and the potential for increased activity during the summer months. The price target of $40.00 remains unchanged, reflecting TD Cowen’s assessment of the company’s valuation in light of these recent developments. With a current market capitalization of $62.88 billion, Roblox trades at demanding multiples, and InvestingPro analysis reveals 13 additional key insights about the company’s valuation and growth prospects.
In other recent news, Roblox Corp. has completed its reincorporation from Delaware to Nevada, a move ratified during the company’s annual meeting and confirmed in an SEC filing. This transition, effective as of May 30, 2025, does not impact the company’s operations or financial obligations but subjects Roblox to Nevada state laws. Additionally, several analysts have adjusted their outlooks on Roblox, with Piper Sandler raising its stock price target to $105 and BofA Securities to $103, both maintaining positive ratings due to strong user engagement and growth prospects. BMO Capital Markets also increased its target to $95, citing robust daily active user growth, particularly driven by the success of the game "Grow a Garden."
Conversely, TD Cowen has maintained a Sell rating with a $40 target, expressing concerns over potential overestimation of engagement metrics and skepticism about near-term growth. Despite these varied analyst views, Roblox’s second-quarter results are anticipated to surpass guidance, with expectations of significant growth in bookings and daily active users. However, BofA Securities notes that ad revenues are not expected to be substantial, despite increased investment for growth. The company has also seen a rally in share prices, attracting interest from new long-term growth investors.
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