Roblox(US:RBLX) ZACKS·2025-12-22 18:11Core Viewpoint - Roblox Corporation (RBLX) has experienced a significant 38% decline in stock price over the past three months, contrasting with the industry's decline of 11.1% and the S&P 500's gain of 3.3% [1][2] Financial Performance - In Q3 2025, Roblox reported a 70% year-over-year increase in daily active users (DAUs), reaching 151.5 million, and bookings rose to $1.92 billion, also up 70% year-over-year [11][12] - The Zacks Consensus Estimate for 2025 and 2026 sales is projected at $6.64 billion and $8.1 billion, indicating year-over-year growth of 51.9% and 22.1%, respectively [15] Growth Concerns - The decline in RBLX stock is attributed to concerns over slowing growth visibility into 2026, margin compression from increased investments, and the challenge of sustaining recent exceptional growth against tough comparisons [2][6] - Management's cautious tone regarding future growth targets has led investors to recalibrate expectations, interpreting the lack of specific 2026 targets as a sign of potential moderation in bookings growth [6][21] Investment and Spending Strategy - Roblox is intentionally increasing spending on creator payouts, infrastructure, AI capabilities, and safety initiatives, which may pressure margins in the near term [7][8] - The company raised its developer exchange rate by 8.5%, enhancing creator earnings, which have grown 250% over two years [7][12] Market Dynamics - User growth is accelerating globally, particularly in emerging markets like APAC, which monetize at lower rates compared to North America and Europe, raising concerns about revenue quality despite high engagement [9][10] - Advertising remains an under-monetized opportunity, with early tests of rewarded video ads showing promise for future revenue growth [14] Valuation - RBLX is currently valued at a premium compared to the industry, with a forward 12-month price-to-sales ratio of 6.66, higher than competitors like Electronic Arts and Monarch Casino & Resort [18]