Now’s not the time to buy Roblox stock, Roth says

Roblox continues to expand its global ambitions, but Roth Capital’s Senior Research Analyst Eric Handler is cautious ahead of the company’s first-quarter earnings report.

Handler maintained a “Neutral” rating and a 12-month price target of $72.00 for Roblox (Roblox Stock Quote, Chart, News, Analysts, Financials NYSE:RBLX) in an earnings preview published April 29.

The rating followed Roblox’s announcement of its new regional pricing feature, designed to help creators grow international earnings by adjusting in-game item prices to local economic conditions.

“With the introduction of regional pricing and price optimization, we’re providing creators with the tools they need to build global businesses,” Roblox said in an April 21 press release. “Next, we’re working on regional pricing for developer products and new ways for developers to merchandise their items across more surfaces. We’re empowering creators to connect with a wider audience, drive growth, and unlock the full potential of their experiences.”

Handler noted that these tools are part of Roblox’s broader strategy to drive international growth and platform engagement.

“Business momentum continues to build, but waiting for better risk/reward opportunity. We believe Roblox will report better-than-expected 1Q results paced by upside from DAU growth. The company is executing well and remains positioned for 20% annual bookings growth along with steady adjusted EBITDA margin expansion.”

Handler thinks Roblox will generate $ 1.1-billion in adjusted EBITDA on $5.3-billion in bookings (non-GAAP revenue) in fiscal 2025. He expects those numbers to improve to $1.5-billion in adjusted EBITDA on $6.3-billion in bookings in fiscal 2026.

Handler said Roblox’s efforts to expand its appeal, particularly among older users, are showing results, but he remains cautious about the stock’s near-term upside.

“We continue to see evidence that greater emphasis on making discovery of new experiences is helping engage a broader range of users on the Roblox platform, especially in the >13 demographic. This content diversity is evident with recently launched games like Dead Rails, Grow a Garden, and Arise Crossover all becoming Top 10 experiences, with above average session lengths, and are building on the successes seen in 2H24 from Dress to Impress and Rivals.”

But he said Roth doesn’t “see enough upside right now in the shares to take a more constructive view.”

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