Down 17%, Roblox Just Got a Big Vote of Confidence. Is It a Buy?

Roblox (NYSE: RBLX | RBLX Price Prediction) is one of the few successes of the metaverse craze that has since been replaced by artificial intelligence (AI) mania. The platform allows users to create and play 3D games, powered by its Roblox Studio and Client apps. 

Since 2006, it has evolved from a developer tool into a global phenomenon, driven by user-generated content and a virtual economy that utilizes Robux for in-game purchases. With over 100 million daily active users, mostly under 16, Roblox thrives on social gaming and creator payouts, boosted by AI tools and brand partnerships. Its pandemic-era surge and international push cemented its metaverse status. 

Financially, revenue hit $3.6 billion in 2024, up 29%. RBLX stock has doubled in 2025 and soared 250% over three years from $30 lows in 2022. Yet, at $125 per share, it’s down 17% from its $151 peak in September, hit by market volatility. 

Recently, though, Wall Street gave RBLX a big vote of confidence, but with a lofty valuation of 20x sales, is it a buy?

Mostly Bullish Optimism

Citi analysts just reiterated their buy rating on RBLX ahead of its Oct. 30 earnings report, bumping the price target from $152 to $155 per share, implying 24% upside potential. The move signals optimism for a strong Q3 beat, based on proprietary RoMonitor data tracking platform metrics like user engagement and bookings.

The upgrade stems from several factors. First, RoMonitor shows robust Q3 trends, with daily active users and session lengths exceeding expectations, pointing to sustained momentum in core markets. Citi anticipates Roblox will surpass estimates for bookings — the company guided towards $1.6 billion — and adjusted EBITDA of around $200 million. 

They also expect RBLX to raise its full-year guidance, fueled by international expansion and ad revenue pilots. Citi opened a 30-day “upside catalyst watch,” betting earnings will accelerate a rebound. “Roblox’s ecosystem resilience shines through,” the note reads, highlighting creator payouts up 40% year-over-year.

While broader analyst sentiment aligns with Citi’s view, several analysts have Sell ratings, with Weiss Ratings and Cowen analysts recently reiterating their negative outlook. MoffettNathanson has maintained its sell call and a $77 price target since February, wary of Roblox’s monetization hurdles.

Overall, though, Wall Street sees Roblox’s 100+ million DAUs and the $5 billion to $6 billion annualized bookings run rate as durable, despite macro headwinds.

Does the Track Record Back the Hype?

Roblox’s performance largely validates Wall Street’s enthusiasm, but cracks show. Second-quarter bookings rose 51% to $1.4 billion, beating estimates, with DAUs hitting 111.8 million — a record. Losses, however, widened to $278 million from $206 million a year ago, as 24% expense growth outpaced a 20% increase in revenue. 

International users are now nearly 70% of the total, and creator economy payouts topped $1 billion annually, proving the flywheel works.

Yet, justification for buying hinges on execution. With adjusted EBITDA margins negative, RBLX is far from peers like Unity (NYSE:U), due to heavy R&D spending on safety and AI. A valuation at 12x 2025 sales looks stretched compared to historical 8x averages, assuming Roblox’s 25% growth holds. 

If earnings deliver Citi’s expected beat, shares could test $140 quickly, aligning with targets. But misses on guidance could exacerbate the 17% pullback.

Shadows on the Playground

Even so, you can’t discuss Roblox today without addressing child safety concerns, which pose real investor risks. Touted as kid-friendly, the platform has faced backlash for inadequate protections. 

In August, Louisiana sued Roblox, alleging it’s “overrun with harmful content and child predators,” prioritizing profits over safety. Claims include easy access to unsafe roleplay “condo games” and grooming via unverified accounts, a big concern as 40% of Roblox’s users are under 13.

Reports to the National Center for Missing & Exploited Children doubled in the first half of 2025 to nearly 24,000, covering cases of enticement and exploitation. A Revealing Reality study in April found “deeply disturbing” risks, like stranger chats bypassing controls. 

Roblox rolled out AI tools like Sentinel and age estimation, but critics, including California Rep. Ro Khanna, call them insufficient. Ongoing lawsuits from families and states could also trigger fines, user exodus, or regulatory caps on monetization, denting its growth potential. 

For investors, this adds volatility — negative headlines already shaved 5% off shares in August.

Key Takeaway

Citi’s report bolsters the buy case, highlighting near-term catalysts that could lift RBLX 24% to $155 after earnings. Strong metrics and consensus support make it appealing for those betting on the metaverse’s expansion. 

However, a sky-high valuation and safety overhangs demand caution — regulatory hits could erode user trust fast. Investors should buy on dips if they are convinced of its 25% growth potential, but avoid adding if Q3 guidance disappoints. 

At $125 per share, it’s a hold for conservative investors, but a buy for aggressive portfolios eyeing 2026 as a profitability inflection point.