Roblox Corp (NYSE:RBLX) remains Wedbush’s top growth idea in the video game sector after the firm attended the Roblox Developer Conference (RDC) earlier this month.
The analysts reiterated their ‘Outperform’ rating and $165 price target, highlighting what it called a “plethora of expansion opportunities” across safety, engagement, monetization, and advertising.
Wedbush said RDC reinforced its view that Roblox “is the most compelling growth opportunity in the video game sector.”
They pointed to five main drivers: the company’s quick and robust child safety response, viral success of recent hit games, new developer incentives and discovery tools, ongoing genre expansion and aging-up of the user base, and newly introduced pricing optimization across games and regions.
While the firm acknowledged potential challenges ahead, including “more hit pieces or legal action in the coming months,” it said Roblox has consistently been “quick to respond, with meaningful actions that create a safe and engaging environment across its age cohorts.”
Wedbush pointed to popular titles such as Grow a Garden and Steal a Brainrot as evidence of broad-based platform strength.
It also highlighted management’s guidance for third quarter bookings growth of 41% to 45% year-over-year, which it said underscores the “flywheel effect” as multiple games went viral this quarter versus one last quarter.
The note also emphasized Roblox’s early progress in advertising and monetization. “Operating leverage is just beginning to accelerate,” Wedbush wrote.
Key announcements at the conference included the launch of Moments, which could boost engagement and advertising potential, a developer exchange fee increase to 38% that was well received by creators, successful testing of rewarded video ads, expansion to more devices, and the upcoming rollout of SLIM, a lightweight interactive model system.
The broker added that Roblox is in the early stages of monetizing advertising and improving operating leverage, and maintained that upcoming catalysts, including earnings data and updates on Moments, could support further upside.
Wedbush’s $165 price target implies about 29% upside from Roblox’s Friday closing price.
The firm’s valuation is based on roughly 50 times its fiscal year 2027 EBITDA estimate.