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Investing.com -- UBS initiated coverage of Roblox with a Neutral rating and a $103 price target, saying the company remains a unique asset in interactive entertainment but is likely to face slower growth next year as it laps several viral hits and increases investment to support a larger user base.
Roblox sits at the center of three major shifts in gaming: more social play, hardware-agnostic experiences and lower barriers to creation driven by AI.
UBS said the company’s toolset has enabled developers to build content once and distribute it across devices and languages, helping fuel a cycle of creation, engagement and spending.
Roblox delivered 70 % bookings growth in the third quarter and more than 50 % growth year to date, but UBS expects the pace to ease in 2026 unless new breakout titles emerge.
The firm warned that new safety and age-verification tools rolling out in December could weigh on short-term usage, and that advertising represents a large opportunity but carries high execution risk due to the platform’s younger audience.
UBS forecasts 23 % bookings growth in 2026, slightly above management’s target of about 20 % a year. It expects adjusted EBITDA margins to contract by about 40 basis points next year as the company catches up on infrastructure spending and increases developer payouts.
The broker sees margins expanding again from 2027, supported by AI-driven efficiencies and a shift toward higher-margin platforms.
The $103 price target is based on roughly 27 times 2027 estimated adjusted EBITDA, or about one times forward growth, which UBS said is broadly in line with the stock’s historical trading range and peers.