Roblox Stock: Is Wall Street Bullish or Bearish?

Roblox Corporation (RBLX) operates as an online entertainment platform, boasting a market cap of $23.09 billion. Headquartered in San Mateo, California, the company offers Roblox Studio, a toolset that allows developers and creators to build, publish, and operate 3D experiences and other content; Roblox Client, an application that allows users to explore the 3D digital world; and Roblox Cloud, which provides services and infrastructure that power the human co-experience platform.

Shares of the online gaming platform have underperformed the broader market considerably over the past year. RBLX has gained 2.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 23%. In 2024 alone, RBLX stock is down 20%, while the SPX is up 7.3% on a YTD basis.

Narrowing the focus, RBLX’s underperformance looks even more pronounced in comparison to the S&P Software & Services ETF SPDR (XSW). The exchange-traded fund has gained about 27% over the past year, significantly outperforming RBLX’s low single-digit returns for the period. 

RBLX’s weak price action relative to the broader indexes over the past year can be attributed to its expanding net losses in fiscal 2023. Investors’ confidence took a hit after management said that it expects to continue reporting net losses for the foreseeable future. RBLX guided for a full-year 2024 net loss of around $1.4 billion.

For the current fiscal year, ending in December, analysts expect RBLX’s loss per share to increase 11.8% year over year to $2.09. The company’s earnings surprise history is mixed. It beat or matched the consensus estimate in three of the last four quarters while missing the forecast on one other occasion. 

Among the 23 analysts covering RBLX stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” five “Holds,” and two “Strong Sells.”

This configuration is slightly more bullish than three months before, with 14 analysts suggesting a “Strong Buy,” four giving a “Hold,” and four advising a “Strong Sell.”

Recently, JPMorgan analyst Cory Carpenter upgraded the stock from Neutral to Overweight and raised his price target from $41 to $48.

The mean price target of $49.05 represents a 34.2% premium to RBLX’s current price levels. The Street-high price target of $60 suggests an ambitious upside potential of 64.1%.