Bank of America (NYSE:BAC | BAC Price Prediction) slashed its price target on Roblox (NYSE:RBLX) stock to $48 from $165 and downgraded the stock to Neutral from Buy, the most aggressive call on Wall Street following the company’s Q1 2026 earnings report. The dramatic revision reflects deepening concern that mandatory age verification and discovery algorithm changes are inflicting structural damage on engagement.
Roblox stock fell roughly 18% intraday on May 1, with RBLX stock changing hands near $45.50.
| Ticker | Company | Firm | Action | Old Rating | New Rating | Old Target | New Target |
|---|---|---|---|---|---|---|---|
| RBLX | Roblox | BofA | Downgrade & price target cut | Buy | Neutral | $165 | $48 |
The Analyst’s Case
BofA noted thaat Roblox’s Q1 bookings were “okay” yet leading indicators deteriorated and Q2 guidance came in “well below expectations.” The firm called the bookings guidance cut from about 24% year over year (YoY) to 10% at the midpoint “unexpected,” and trimmed its multiple to reflect uncertainty around Roblox’s strategy.
Other firms diverged. Raymond James downgraded CMG stock to Market Perform from Outperform, citing safety and discovery changes pressuring engagement. TD Cowen upgraded the stock to Hold from Sell with a $49 target, calling valuation more reasonable.
JPMorgan cut its Roblox stock price target to $50 from $75, while Morgan Stanley reduced to $62 from $140 but kept Overweight, noting “strength beneath the surface could create greater room for revisions ahead.” Canaccord moved to $80 from $140 (Buy), and Needham cut to $60 from $105 (Buy), citing “peak uncertainty.”
Company Snapshot
Roblox operates a user-generated 3D gaming and social platform with a market capitalization of about $31.19 billion. Q1 2026 revenue reached $1.44 billion, missing the $1.75 billion consensus by 18% despite 39% YoY growth. Daily active users hit 132 million (up 35% YoY), and free cash flow rose to $596 million.
Roblox’s net loss widened to $248 million, including a $57 million legal settlement accrual. For prior context, see coverage of Roblox’s Q1 2026 earnings miss.
Why the Move Matters Now
Roblox lowered its FY2026 revenue growth to 20%-25% and bookings growth to 8%-12%, with sequential DAU declines expected in Q2. Management cited age-verification headwinds, the December 2025 Russia ban, and Q2 algorithm experiments. Roblox stock trades at a price-to-sales ratio of 7.47x with a forward P/E ratio of 192x, while RBLX stock is down roughly 44% year to date.
The consensus Roblox stock analyst price target sits near $97.16, leaving BofA’s $48 well below the Street average. Insider activity tilts cautious. CEO David Baszucki sold over 250,000 shares on February 10 at roughly $72.62, and multiple executives continued selling in April near $58, with no open-market insider purchases during the period.
What It Means for Your Portfolio
The bull case rests on Morgan Stanley’s view that fixes are coming and TD Cowen’s argument that Roblox’s valuation now reflects the facts on the ground. The bear case is structural: age verification may have permanently lowered the engagement ceiling for Roblox.
Prudent investors may want to wait for Roblox’s Q2 2026 results to confirm whether the sequential DAU pressure is temporary. Position sizing on Roblox stock should reflect peak uncertainty until management proves discovery and safety changes can coexist with reaccelerating bookings.
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