Roblox Corp (NYSE:RBLX) shares added almost 8% at about $126 on Monday morning after the gaming platform saw bullish commentary from several analysts, citing its strong user growth and monetization prospects.
On Friday, Wolfe Research analysts upped their rating on the stock to ‘Buy’ from ‘Hold’ and increased their price target to $150, while earlier this month Oppenheimer boosted its price target to $158 while maintaining its ‘Outperform’ rating.
Wedbush on Monday repeated its ‘Outperform’ rating and $165 price target on Roblox, viewing it as the most compelling growth opportunity in the video game sector, notwithstanding a slew of hit pieces and legal action.
They attributed this to management’s quick, decisive, and robust child safety response, which should assuage investor concerns.
This includes implementing technology for age estimation, adding “Trusted Connections,” more privacy tools and additional insights for parents of teens.
“We think Roblox’s response to recent allegations and legal action regarding its work to protect children on its platform is enough to convince parents who actively utilize parental controls, along with investors who are familiar with the slew of safety tools and safeguards Roblox continues to add regularly on its platform,” the analysts wrote.
“We believe that Roblox should have a zero-tolerance policy on predatory behavior on its platform, and think it is legitimately working toward that goal, as trust and safety are paramount to its success.”
Wedbush also highlighted that Roblox’s growth is being fueled by hit games, developer incentives, infrastructure upgrades, AI-driven discovery, genre expansion, and an aging user base, all of which boost ad inventory, pricing, and revenue potential.
Roblox’s broad-based platform engagement, viral games, early monetization of games and ads, and accelerating operating leverage support strong Q3 bookings growth guidance of 41% to 45%, they added.
“We expect some ongoing volatility in Roblox’s share price when new hit pieces or legal action surface; however, Roblox continues to be quick to respond, with meaningful actions it has taken and plans to create a safe and engaging environment across its age cohorts,” Wedbush concluded.