Wedbush Reaffirms "Neutral" Rating for Roblox (NYSE:RBLX)

Key Points

• Wedbush reaffirmed its “Neutral” rating on Roblox but cut its price target to $40 from $65, implying roughly 17.75% downside from the reported share price.
• Analyst sentiment remains mixed, with MarketBeat showing an overall “Hold” rating and an average price target of $67.63; recent calls range from “Strong Buy” to “Sell.”
• Roblox’s latest quarter showed a narrower-than-expected loss and 8.3% revenue growth to $1.47 billion, but revenue missed estimates and management’s weaker bookings and growth outlook has raised concerns about slowing momentum and the impact of safety changes.

Roblox (NYSE:RBLX - Get Free Report)'s stock had its "neutral" rating reaffirmed by Wedbush in a research report issued to clients and investors on Friday, MarketBeat Ratings reports. They presently have a $40.00 price objective on the stock, down from their previous price objective of $65.00. Wedbush's price objective would indicate a potential downside of 17.75% from the company's current price.

Other analysts also recently issued reports about the company. Barclays reiterated a "negative" rating on shares of Roblox in a report on Friday. Bank of America downgraded Roblox from a "buy" rating to a "neutral" rating and set a $48.00 target price for the company. in a research report on Friday, May 1st. Roth Capital set a $65.00 target price on Roblox in a research note on Tuesday, May 5th. Weiss Ratings reiterated a "sell (e+)" rating on shares of Roblox in a report on Wednesday, June 24th. Finally, Citigroup reissued a "buy" rating on shares of Roblox in a research report on Wednesday, July 15th. One research analyst has rated the stock with a Strong Buy rating, thirteen have given a Buy rating, twelve have assigned a Hold rating and four have assigned a Sell rating to the company. Based on data from MarketBeat, the stock currently has an average rating of "Hold" and an average price target of $67.63.

Roblox Trading Down 3.0%

Shares of RBLX stock opened at $48.63 on Friday. The company has a quick ratio of 0.89, a current ratio of 0.89 and a debt-to-equity ratio of 2.45. Roblox has a fifty-two week low of $40.15 and a fifty-two week high of $150.59. The firm's 50 day moving average price is $49.53 and its two-hundred day moving average price is $57.08. The stock has a market cap of $32.66 billion, a price-to-earnings ratio of -30.78 and a beta of 1.41.

Roblox (NYSE:RBLX - Get Free Report) last released its quarterly earnings data on Thursday, July 30th. The company reported ($0.26) earnings per share (EPS) for the quarter, topping the consensus estimate of ($0.34) by $0.08. Roblox had a negative net margin of 20.69% and a negative return on equity of 277.69%. The company had revenue of $1.47 billion during the quarter, compared to analyst estimates of $1.60 billion. During the same quarter in the prior year, the business earned ($0.41) earnings per share. The business's quarterly revenue was up 8.3% compared to the same quarter last year. On average, analysts anticipate that Roblox will post -1.39 EPS for the current year.

Roblox announced that its Board of Directors has initiated a share buyback program on Tuesday, May 19th that allows the company to buyback $3.00 billion in outstanding shares. This buyback authorization allows the company to purchase up to 9.5% of its shares through open market purchases. Shares buyback programs are usually an indication that the company's board believes its shares are undervalued.

Insiders Place Their Bets

In other Roblox news, insider Mark Reinstra sold 17,275 shares of Roblox stock in a transaction that occurred on Wednesday, May 20th. The stock was sold at an average price of $45.28, for a total transaction of $782,212.00. Following the sale, the insider directly owned 438,198 shares in the company, valued at $19,841,605.44. The trade was a 3.79% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, Director Gregory Baszucki sold 16,666 shares of the company's stock in a transaction that occurred on Tuesday, May 5th. The shares were sold at an average price of $44.97, for a total value of $749,470.02. Following the completion of the transaction, the director directly owned 1,294,501 shares in the company, valued at approximately $58,213,709.97. The trade was a 1.27% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 161,983 shares of company stock valued at $7,580,990. Insiders own 10.05% of the company's stock.

Institutional Trading of Roblox

A number of hedge funds and other institutional investors have recently made changes to their positions in RBLX. Norges Bank acquired a new position in Roblox during the 4th quarter worth $435,424,000. SRS Investment Management LLC bought a new position in shares of Roblox during the fourth quarter worth about $238,065,000. Amundi lifted its position in shares of Roblox by 83.7% during the first quarter. Amundi now owns 5,774,151 shares of the company's stock worth $326,586,000 after purchasing an additional 2,631,074 shares during the last quarter. Capital International Investors grew its stake in Roblox by 7.3% in the fourth quarter. Capital International Investors now owns 31,953,301 shares of the company's stock worth $2,589,282,000 after purchasing an additional 2,184,439 shares in the last quarter. Finally, ValueAct Holdings L.P. increased its holdings in Roblox by 39.5% in the fourth quarter. ValueAct Holdings L.P. now owns 5,975,821 shares of the company's stock valued at $484,221,000 after buying an additional 1,692,600 shares during the last quarter. Institutional investors own 94.46% of the company's stock.

Roblox News Roundup

Here are the key news stories impacting Roblox this week:

• Positive Sentiment: Roblox reported a second-quarter adjusted loss of $0.26 per share, narrower than the approximately $0.33–$0.34 loss analysts expected. The loss also improved from $0.41 per share a year earlier. Roblox Q2 earnings report
• Positive Sentiment: Revenue rose 8.3% year over year to $1.47 billion, while daily active users increased 10% year over year, indicating continued platform expansion despite decelerating growth. Roblox daily active users growth
• Neutral Sentiment: The European Commission said Roblox could potentially be classified as a very large online platform under the Digital Services Act, which may increase regulatory scrutiny and compliance requirements. Roblox and EU Digital Services Act
• Negative Sentiment: Roblox forecast third-quarter bookings of $1.58 billion to $1.65 billion, below Wall Street expectations. Management also projected revenue growth of only 4% to 10%, suggesting a sharp slowdown as platform changes affect discovery, onboarding, and monetization. Roblox quarterly bookings outlook
• Negative Sentiment: Stricter age-verification and safety measures are reportedly weighing on user onboarding and engagement, while Roblox missed analyst expectations on key user metrics. These factors raise concerns about near-term bookings and advertising or virtual-goods monetization. Roblox safety changes and bookings forecast
• Negative Sentiment: Analysts cut forecasts and price targets following the disappointing outlook, reinforcing investor concerns that Roblox’s growth reset may persist beyond the current quarter. Analyst forecast cuts for Roblox
• Negative Sentiment: Several law firms publicized securities-fraud class-action claims concerning Roblox, including allegations related to disclosures about age verification and its business impact. Although the announcements do not establish liability, they add reputational and potential legal risk. Roblox securities class action alert

Roblox Company Profile

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.