Morgan Stanley reiterated an Equal-Weight rating on Roblox Corporation (NYSE:RBLX) with a 12-month price target of $30.00 on the stock after the American video game developer hosted its annual developer's conference in San Francisco on Friday.
“We viewed the event as more evolutionary than revolutionary.” Morgan Stanley analysts wrote in a note.
During the conference, management highlighted growth in user and engagement metrics, before proceeding to unveil upcoming product features, capabilities, and tools that developers can anticipate within the coming year.
Management announced that Roblox will become accessible on Meta Quest later this month and on PlayStation next month. Although the expansion to more platforms is a positive development, it's worth noting that mobile and PC users still comprise 99% of the user base. Roblox has had limited success on Xbox and Oculus so far. Given this, Morgan Stanley anticipates that these platform expansions will have a limited impact on Roblox engagement in the short term.
The analysts added, “While the expansion to PlayStation and Meta (NASDAQ:META) Quest were new developments, we expect them to generate limited incremental engagement in the near-term and look to the company's planned Investor Day on 11/15 for further detail on the financial outlook.”
They were encouraged to see expanded AI demos at the conference. The demos included generating custom avatars and virtual landscapes with English text prompts. Despite potential near-term headwinds, The analysts expect AI to help drive content creation and higher operating efficiency over time.
Shares of RBLX are up 0.83% in premarket trading Monday morning.