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Analysts See Even More Upside at Roblox Post Quiet Period

Roblox Corp. (NYSE: RBLX) 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.

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.