Core Viewpoint - Jefferies has lowered the price target for Roblox to $85 from $100 while maintaining a Hold rating ahead of the company's fourth-quarter earnings release [1] Group 1: Earnings Outlook - Investor sentiment is cautious leading into the earnings results, with a focus on the fiscal 2026 bookings outlook as a potential reset point for expectations [2] - There are concerns that the guidance for fiscal 2026 may be lower than the anticipated 20% year-over-year bookings growth, or that no full-year guidance may be issued [2] Group 2: User Trends and Risks - User trends have remained stable month over month since November, which reduces near-term risk for the fourth quarter and first quarter [3] - However, uncertainty in the second half of the year, due to challenging year-over-year comparisons, is likely to continue impacting the stock negatively [3] Group 3: Stock Performance and Valuation - Roblox shares have decreased by 38% since the third-quarter 2025 earnings, despite the company achieving its strongest results in history [4] - Concerns regarding slower bookings growth for 2026 compared to the long-term target of over 20% and potential EBITDA margin compression have led to a contraction in valuation, dropping from 45x to 30x forward EBITDA [4] Group 4: Price Target Justification - Jefferies' revised price target of $85 is based on a 30x multiple applied to fiscal 2026 EBITDA of $1.93 billion, indicating that investor positioning appears skewed to the downside as they prepare for conservative guidance [5] - Fiscal 2026 is viewed as a clearing event for expectations [5]

Core Viewpoint - Roblox Corporation (RBLX) has demonstrated strong stock performance, gaining 30.8% over the past six months, contrasting with the decline in the Zacks Gaming industry and broader market indices [1][2]. Stock Performance - As of the latest close, RBLX stock was priced at $52.96, below its 52-week high of $75.74 and above its 52-week low of $29.55 [2]. - RBLX has outperformed competitors such as GDEV Inc., Accel Entertainment, and Flutter Entertainment, which saw declines of 70.6%, 16.5%, and 12.6% respectively over the same period [2]. Growth Factors - The company is experiencing steady growth, with bookings increasing by 24% year-over-year to $4,369.1 million in 2024, supported by a rise in daily unique paying users from 852,000 in 2023 to approximately 1,040,000 [5]. - Strategic investments have improved app stability, launch times, and user engagement, contributing to higher spending and growth in bookings per daily active user [6]. Advertising and Revenue Projections - Roblox is advancing in the advertising sector through partnerships, including a notable collaboration with Google to enhance immersive advertising formats [7]. - For 2025, the company anticipates revenue between $4,245 million and $4,345 million, reflecting an 18% to 21% year-over-year increase, with bookings projected between $5,200 million and $5,300 million, marking growth of 19% to 21% [8]. Profitability Concerns - Despite growth in user activity and bookings, the company reported a net loss of $940.6 million in 2024, with expectations for a wider loss in 2025 between $1,070 million and $995 million due to high R&D and marketing expenses [10]. Technical Indicators - The stock is trading above its 200-day simple moving average, indicating solid long-term momentum, but below its 50-day simple moving average, reflecting near-term volatility [13]. Valuation - RBLX is currently valued at a premium compared to the industry, with a forward 12-month price-to-sales ratio of 5.99X, significantly higher than the industry average of 2.33X [14]. Conclusion - The company shows strength in user engagement and bookings, supported by platform improvements and strategic partnerships, but faces challenges with widening losses and elevated expenses [16][17].