Is Roblox overvalued?

Roth Capital Markets analyst Eric Handler raised his price target on Roblox (Roblox Stock Quote, Chart, News, Analysts, Financials NYSE:RBLX) to $146.00 from $138.00 and maintained a “Neutral” rating in an Oct. 17 earnings preview, saying the company’s innovation strategy and user engagement trends are driving stronger growth but that much of the optimism is already reflected in the share price.

“Expectations are moving higher as innovation initiatives are working,” Handler said. “We’re raising our third- and fourth-quarter estimates to reflect ongoing strength from more sophisticated game development, improved discovery, and better monetization, which are driving increased user growth and engagement. Consensus estimates have been trending higher, but the buyside has an even higher bar.”

Roblox operates an online platform that allows users to create, publish, and experience 3D digital worlds through its Roblox Client, Roblox Studio, and Roblox Cloud infrastructure. The company’s ecosystem supports both user-generated and professionally developed games, making it one of the largest immersive entertainment platforms globally.

Handler said new, professionally developed titles are “super-charging engagement”, citing the emergence of popular experiences such as 99 Nights in the Forest, Plants vs. Brainrots, Steal a Brainrot, and Fish It! that have replaced earlier viral hits like Grow a Garden.

“The platform continues to benefit from an older, more experienced user base, regional pricing adjustments, and advanced analytics that help developers improve monetization,” he said.

Driven by stronger-than-expected engagement, Handler raised his Q3 forecast to $1.785-billion in bookings (+58%) and $446-million in adjusted EBITDA (+100%), up from $1.64-billion and $380-million, respectively, above both management’s and consensus estimates. He expects daily active users (DAUs) to reach 134 million, up 51% year-over-year and 20% quarter-over-quarter, with average bookings per DAU of $13.34 (+5%).

For the fourth quarter, he now models $1.891-billion in bookings (+39%) and $550-million in Adjusted EBITDA (+44%), up from prior forecasts of $1.78-billion and $495-million, also exceeding Street consensus of $1.808-billion and $503-million, respectively.

Handler said Roblox should generate $1.52-billion in Adjusted EBITDA on $4.81-billion of revenue in fiscal 2025, improving to $2.13-billion on $6.03-billion in fiscal 2026.

“With Roblox trading at EV/bookings and EV/adjusted EBITDA multiples of roughly 14.3×/11.4× and 59×/43× for 2025 and 2026, a lot of good news is already priced in,” he said. “In the near term, bookings growth will likely need to exceed 60% in Q3 for shares to keep rising. Expectations for 2026 have moved beyond the company’s traditional 20% annual growth target, with investors now looking for at least 25%.”

His $146.00 target price is based on 13.5× EV/bookings and 48× EV/adjusted EBITDA multiples for 2026.

“We like the continued innovation and evolution at Roblox,” Handler said, “but we don’t see enough incremental upside in the shares right now to take a more constructive view.”

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