Roblox Corp (NYSE:RBLX) is facing near-term pressure on user growth expectations as Wedbush lowered its fiscal 2026 estimates ahead of the company’s second quarter results, citing ongoing friction from age-verification measures that the firm believes are weighing on access to the platform.
The analysts maintained an ‘Outperform’ rating and a $65 price target, above current levels of $48.
Wedbush lowered its fiscal 2026 daily active user (DAU) estimate to 129.3 million from 135 million, bookings expectations to $7.40 billion from $7.50 billion and adjusted EBITDA estimates to $1.51 billion from $1.54 billion. The revised bookings estimate sits in the lower half of Roblox’s previous guidance range of $7.33 billion to $7.60 billion, while adjusted EBITDA is near the lower end of the company’s outlook.
The analysts wrote that the estimate cuts were driven entirely by the DAU revision, which they believe points to second-quarter results below current consensus expectations. Wedbush added that the adjustment is primarily a near-term revision and kept its $65 price target based on a 22x enterprise value to EBITDA multiple on its revised fiscal 2027 adjusted EBITDA estimate of $1.95 billion.
Wedbush’s DAU forecast is based on Similarweb’s mobile proxy data, which the firm noted has historically tracked with Roblox’s reported DAUs. The analysts wrote that the proxy averaged 40.5 million users in the second quarter, down about 5% from the first quarter, which implied reported DAUs of around 113 million.
However, Wedbush noted that the model may overstate the decline because the proxy only captures mobile activity and may be disproportionately affected by the age-verification gate, which has had a greater impact on younger, more mobile-focused users. The analysts wrote that the 113 million estimate should be viewed as a floor rather than a base case, with their forecast modeling 119 million DAUs to account for users on console and PC platforms.
The analysts wrote that they expect the user friction from age verification to continue through the end of the year, with the largest reductions concentrated in Asia-Pacific and Rest-of-World regions where prior growth was stronger and comparisons are more difficult. Wedbush noted that these regions generate lower monetization levels, limiting the impact on bookings.
“An approximately 5 million DAU cut becomes only an approximately $100 million bookings cut,” the analysts wrote, adding that a shift toward higher-yielding users could help offset some of the decline in user numbers. Wedbush maintained its fiscal 2027 estimates and price target ahead of the company’s earnings report.
Looking ahead to Roblox’s second-quarter print, Wedbush highlighted several factors it will monitor, including app-store ratings and user engagement trends, monetization among users aged 18 and older, progress in advertising and homepage initiatives, regional trends following regulatory actions in markets including Vietnam and Turkey, and whether monetization continues to outpace user growth.
The analysts also pointed to potential risks, including a larger-than-expected decline in proxy data, tougher comparisons during August and September, and ongoing legal and regulatory issues related to child safety and metric-related allegations.
Roblox is scheduled to report its Q2 earnings on July 30.