Roblox (NYSE:RBLX) Raised to "Strong-Buy" at Arete Research

Key Points

• Arete Research upgraded Roblox from “hold” to strong-buy, adding to a mixed but generally positive analyst backdrop. MarketBeat notes the stock’s overall consensus remains “Moderate Buy” with a $86.30 target price.
• Roblox shares rose 14.3% in the session highlighted by the article, with the stock opening at $54.37. The move came amid renewed investor interest, including unusual call option activity and talk of the stock being undervalued after a recent selloff.
• Company fundamentals and risks remain mixed: Roblox beat earnings expectations on EPS and posted 43.4% revenue growth year over year, but revenue missed estimates. The article also points to a $3 billion share buyback and ongoing legal scrutiny from securities class-action lawsuits.

Roblox (NYSE:RBLX - Get Free Report) was upgraded by analysts at Arete Research from a "hold" rating to a "strong-buy" rating in a research note issued on Monday,Zacks.com reports.

Several other equities analysts also recently issued reports on the stock. Wolfe Research began coverage on shares of Roblox in a research note on Friday, May 1st. They issued an "outperform" rating for the company. Bank of America lowered shares of Roblox from a "buy" rating to a "neutral" rating and set a $48.00 price objective on the stock. in a research report on Friday, May 1st. TD Cowen raised shares of Roblox from a "sell" rating to a "hold" rating and dropped their price objective for the company from $54.00 to $49.00 in a research note on Friday, May 1st. Wedbush cut shares of Roblox from a "hold" rating to a "neutral" rating in a report on Friday, May 1st. Finally, Citigroup cut shares of Roblox from a "buy" rating to an "underperform" rating in a report on Monday. Two equities research analysts have rated the stock with a Strong Buy rating, fifteen have issued a Buy rating, eleven have issued a Hold rating and two have issued a Sell rating to the company's stock. Based on data from MarketBeat.com, Roblox has an average rating of "Moderate Buy" and a consensus target price of $86.30.

Roblox Stock Up 14.3%

Shares of RBLX opened at $54.37 on Monday. Roblox has a 52 week low of $40.15 and a 52 week high of $150.59. The company has a market capitalization of $36.51 billion, a price-to-earnings ratio of -34.41 and a beta of 1.44. The company has a quick ratio of 0.89, a current ratio of 0.89 and a debt-to-equity ratio of 2.45. The stock's 50-day moving average price is $48.06 and its 200-day moving average price is $61.84.

Roblox (NYSE:RBLX - Get Free Report) last announced its earnings results on Thursday, April 30th. The company reported ($0.35) earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.41) by $0.06. The business had revenue of $1.44 billion for the quarter, compared to analyst estimates of $1.74 billion. Roblox had a negative net margin of 20.69% and a negative return on equity of 277.69%. The company's revenue for the quarter was up 43.4% compared to the same quarter last year. During the same quarter last year, the business earned ($0.32) earnings per share. On average, sell-side analysts predict that Roblox will post -1.4 EPS for the current year.

Roblox announced that its board has approved a stock repurchase plan on Tuesday, May 19th that allows the company to repurchase $3.00 billion in shares. This repurchase authorization allows the company to reacquire up to 9.5% of its stock through open market purchases. Stock repurchase plans are generally a sign that the company's board of directors believes its shares are undervalued.

Insider Activity at Roblox

In other Roblox news, CAO Amy Marie Rawlings sold 2,895 shares of the business's stock in a transaction dated Wednesday, May 20th. The stock was sold at an average price of $45.24, for a total transaction of $130,969.80. Following the completion of the sale, the chief accounting officer owned 35,238 shares of the company's stock, valued at approximately $1,594,167.12. The trade was a 7.59% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Mark Reinstra sold 5,978 shares of the business's stock in a transaction on Monday, June 8th. The stock was sold at an average price of $41.71, for a total transaction of $249,342.38. Following the transaction, the insider directly owned 426,760 shares in the company, valued at approximately $17,800,159.60. The trade was a 1.38% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 189,449 shares of company stock worth $9,179,410. 10.05% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

Several hedge funds have recently added to or reduced their stakes in RBLX. Baird Financial Group Inc. raised its holdings in Roblox by 1.4% in the 2nd quarter. Baird Financial Group Inc. now owns 7,294 shares of the company's stock worth $767,000 after purchasing an additional 102 shares in the last quarter. Sunbelt Securities Inc. increased its position in shares of Roblox by 58.7% during the third quarter. Sunbelt Securities Inc. now owns 284 shares of the company's stock valued at $39,000 after buying an additional 105 shares during the period. Brown Brothers Harriman & Co. lifted its holdings in Roblox by 2.8% in the third quarter. Brown Brothers Harriman & Co. now owns 4,042 shares of the company's stock worth $560,000 after buying an additional 110 shares during the period. NewEdge Advisors LLC lifted its holdings in Roblox by 1.3% in the second quarter. NewEdge Advisors LLC now owns 10,374 shares of the company's stock worth $1,091,000 after buying an additional 138 shares during the period. Finally, L2 Asset Management LLC boosted its position in Roblox by 5.9% during the 3rd quarter. L2 Asset Management LLC now owns 2,783 shares of the company's stock valued at $386,000 after acquiring an additional 154 shares in the last quarter. Institutional investors and hedge funds own 94.46% of the company's stock.

Key Roblox News

Here are the key news stories impacting Roblox this week:

• Positive Sentiment: Roblox is seeing unusually heavy call option activity, suggesting some traders are betting on further upside in the stock. Roblox shows huge, unusual call option activity - is RBLX stock too cheap?
• Positive Sentiment: Market commentary is highlighting a possible valuation opportunity in Roblox after the recent selloff, which may be helping attract bargain hunters. Roblox stock is surging Monday: What's driving the action?
• Neutral Sentiment: Several law firms are reminding investors of the August 7 deadline to seek lead-plaintiff status in the securities class action, keeping legal scrutiny around Roblox in the spotlight. ROSEN, HIGHLY REGARDED INVESTOR COUNSEL, Encourages Roblox Corporation Investors to Secure Counsel Before Important Deadline in Securities Class Action - RBLX
• Neutral Sentiment: The class-action filings center on Roblox’s April quarter update, where the company reported a sharp sequential decline in daily active users after its age-verification rollout, adding uncertainty around user growth. Roblox Corporation (RBLX) Faces Securities Class Action Amid Surprise Age Verification Impact, $6.7 Billion Market Cap Wiped Out - HBBS
• Negative Sentiment: Multiple firms say a securities fraud class action has already been filed against Roblox and its officers, a legal overhang that could pressure sentiment. RBLX Investors Have Opportunity to Lead Roblox Corporation Securities Fraud Lawsuit

About Roblox

Roblox Corporation operates Roblox, a user-generated online platform that enables people to create, share and monetize immersive 3D experiences and games. The core offering centers on Roblox Studio, a development environment that allows independent creators and studios to design interactive worlds using the company's building tools and scripting language. Content on the platform spans games, virtual hangouts, branded experiences and live events, all delivered through a persistent social environment.

Roblox's business model is built around its virtual economy and creator ecosystem.

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