Is Roblox overvalued? – Cantech Letter

Roth Capital Markets analyst Eric Handler raised his worth goal on Roblox (Roblox Inventory Quote, Chart, Information, Analysts, Financials NYSE:RBLX) to $146.00 from $138.00 and maintained a “Impartial” ranking in an Oct. 17 earnings preview, saying the corporate’s innovation technique and consumer engagement developments are driving stronger progress however that a lot of the optimism is already mirrored within the share worth.

“Expectations are transferring increased as innovation initiatives are working,” Handler stated. “We’re elevating our third- and fourth-quarter estimates to mirror ongoing energy from extra subtle recreation growth, improved discovery, and higher monetization, that are driving elevated consumer progress and engagement. Consensus estimates have been trending increased, however the buyside has a fair increased bar.”

Roblox operates an internet platform that permits customers to create, publish, and expertise 3D digital worlds by way of its Roblox Shopper, Roblox Studio, and Roblox Cloud infrastructure. The corporate’s ecosystem helps each user-generated and professionally developed video games, making it one of many largest immersive leisure platforms globally.

Handler stated new, professionally developed titles are “super-charging engagement”, citing the emergence of common experiences comparable to 99 Nights within the Forest, Crops vs. Brainrots, Steal a Brainrot, and Fish It! which have changed earlier viral hits like Develop a Backyard.

“The platform continues to profit from an older, extra skilled consumer base, regional pricing changes, and superior analytics that assist builders enhance monetization,” he stated.

Pushed 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 each administration’s and consensus estimates. He expects day by day energetic customers (DAUs) to succeed in 134 million, up 51% year-over-year and 20% quarter-over-quarter, with common bookings per DAU of $13.34 (+5%).

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

Handler stated Roblox ought to generate $1.52-billion in Adjusted EBITDA on $4.81-billion of income in fiscal 2025, bettering to $2.13-billion on $6.03-billion in fiscal 2026.

“With Roblox buying and selling at EV/bookings and EV/adjusted EBITDA multiples of roughly 14.3×/11.4× and 59×/43× for 2025 and 2026, numerous excellent news is already priced in,” he stated. “Within the close to time period, bookings progress will probably must exceed 60% in Q3 for shares to maintain rising. Expectations for 2026 have moved past the corporate’s conventional 20% annual progress goal, with buyers now on the lookout for not less than 25%.”

His $146.00 goal worth is predicated on 13.5× EV/bookings and 48× EV/adjusted EBITDA multiples for 2026.

“We just like the continued innovation and evolution at Roblox,” Handler stated, “however we don’t see sufficient incremental upside within the shares proper now to take a extra constructive view.”

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