Street Calls of the Week
Investing.com -- Morgan Stanley turned more bullish on Roblox Corp., saying the gaming platform is on track to exceed 1 billion monthly active users by 2030, a milestone that could lift its shares to $300 in a bull-case scenario.
Roblox is “a clear leader in the next generation of entertainment platforms,” drawing parallels to user-generated content giants like YouTube, says Morgan Stanley.
Roblox currently has about 400 million monthly users which is twice the combined installed base of PlayStation, Xbox, and Nintendo Switch and just a fraction of YouTube’s audience.
The analysts believe that with only 3% penetration among its target 5–34-year-old demographic, the company still has “significant headroom” for expansion.
Morgan Stanley expects user growth and higher monetization through advertising to drive a sharp earnings ramp-up, estimating over $9 billion in EBITDA by 2030 versus about $1.3 billion this year.
That could justify a valuation above $300 per share, assuming a 25x EV/EBITDA multiple. The firm maintains its Overweight rating and $170 base-case price target.
AI is also seen as a key catalyst. Roblox has cut moderation costs by 45% since 2022 by deploying AI tools and is integrating generative AI features into its creation suite, including the new Cube model introduced earlier this year.
About 1500 games are already experimenting with AI-driven gameplay.
Like YouTube, analysts say Roblox’s user-generated ecosystem benefits from a powerful flywheel effect, more users attract more creators, leading to richer content and deeper engagement.
“We remain bullish on the opportunity ahead,” Morgan Stanley said.