Analysts See Even More Upside at Roblox Post Quiet Period

By Chris Lange Published Apr 5, 11:50AM EDT

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Analysts See Even More Upside at Roblox Post Quiet Period — © pinstock / Getty Images

Roblox Corp. (NYSE: RBLX | RBLX Price Prediction) only came public about a month ago and made a huge splash in its debut with the stock running more than 54% on the first day. Prior to coming public, the company received an unreal valuation. Considering all this, it makes sense that analysts are overly positive on the stock following the close of the quiet period.

Cathie Wood even jumped on the wagon, adding over 500,000 Roblox shares to one of her Ark Invest exchange-traded funds.

The company was founded in 2004. Roblox is an online game platform and game creation system that allows users to program games and play games created by other users. Roblox is free to play, but there are in-game purchases available.

Users are able to create purchasable content through one-time purchases, known as “game passes,” as well as microtransactions that can be purchased more than once, known as “developer products” or “products.” A percentage of the revenue from purchases is split between the developer and Roblox.

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During the quiet period, one analyst (not an underwriter) made a call on the stock. Stifel initiated coverage with a Buy rating and an $85 price target. According to Stifel:

The company has a recent history of impressive growth, with DAUs, hours engaged, and bookings increasing at CAGRs (2018-20) of +65%, +80%, and +94%, respectively. To sustain this momentum, Roblox has a multi-faceted strategy to achieve a goal of “impacting” billions of users. And while we consider such initiatives in our model (i.e, international reach and age demographic expansion), none are fully contemplated. In fact, our illustrative analysis for 2022 implies a range of outcomes with incremental bookings of $1.035 billion-$2.232 billion (vs. Stifel 2022E at $2.807 billion), suggesting meaningful upside, all else being equal.

Stifel went on to say that its estimates assume a bookings compound annual growth rate (2021 to 2023) of 28%, among the fastest rates of growth across Stifel’s coverage universe. This also assumes modest declines during the second half of 2021 (−10%) as the business laps tough comps, followed by a reacceleration for 2022 to 2023 (average approaching 30%), with international growth plus age diversification serving as key drivers.

Here’s what a few other analysts have said now that the quiet period is over:

Truist Securities started coverage with a Buy rating and a $78 price target.
Morgan Stanley started it at Overweight with an $80 target price.
Goldman Sachs started it with a Buy rating and an $81 price target.
BofA Securities started at Buy and has an $85 price target.

Roblox stock traded up about 5% to $70.81 on Monday, in a 52-week range of $60.50 to $79.10. The consensus price target is $72.50.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.