Roblox Corp. (NYSE:RBLX) is pressing its advantage as one of the fastest-growing platforms in gaming, betting that surging user engagement, viral hits like “Grow a Garden” and stepped-up investment in safety and AI can help it capture 10% of the $180 billion video game market and turn its virtual playground into accelerating real-world cash flows.B. Riley Securities analyst Drew Crum initiated coverage on Roblox with a Buy and a price forecast of $125. Crum said the stock can rise more than 30% from the Dec ...

Core Insights - Sands Capital Select Growth Strategy reported a portfolio return of 6.3% in Q3 2025, underperforming the benchmark's 10.5% gain, driven by strong corporate earnings and AI enthusiasm [1] Company Overview: Roblox Corporation (NYSE:RBLX) - Roblox Corporation is recognized as a leading gaming development and distribution platform, with a notable viral game, "Grow a Garden," achieving over 20 million concurrent users, significantly higher than the average of 1 million for other popular experiences [3] - The company experienced a 48% year-on-year revenue growth in Q3 2025, reaching $1.36 billion, indicating strong market performance [4] - Despite a one-month return of -30.66%, Roblox's shares gained 87.83% over the last 52 weeks, closing at $92.73 with a market capitalization of $65.09 billion on November 26, 2025 [2][4] Market Trends and Performance - The surge in daily active users and total hours on the platform rose by 41%, contributing to a 51% year-over-year acceleration in second-quarter bookings [3] - The shift towards new user-generated content experiences is seen as a healthier trend compared to the past reliance on a few mainstay franchises, showcasing Roblox's strength in global distribution [3] Hedge Fund Interest - As of the end of Q2 2025, 75 hedge fund portfolios held shares of Roblox Corporation, an increase from 68 in the previous quarter, indicating growing interest among institutional investors [4]

Core Insights - Roblox has experienced significant growth, with shares more than doubling year to date, driven by a 41% year-over-year increase in daily users in Q2 [1][2] - The viral success of the game "Grow a Garden" has been a key factor in this growth, achieving over 20 million concurrent players and contributing to a total of 27.4 billion hours spent on the platform, a 58% increase year-over-year [1][3] Growth Strategy - The company is focusing on building a growth flywheel, leveraging artificial intelligence (AI) to automate content creation, which accelerates the release of new experiences [4][6] - A 52% year-over-year increase in developer exchange fees indicates that Roblox is incentivizing quality content creation, which is essential for sustaining growth [4][6] User Engagement - The success of "Grow a Garden" has led to increased user engagement, with over 75% of players also engaging with other experiences on the platform [7] - This heightened engagement resulted in a 51% year-over-year increase in bookings for the last quarter, suggesting that the strategy of releasing viral content is effective and intentional [8]

Core Insights - Roblox Corporation (RBLX) and Take-Two Interactive Software, Inc. (TTWO) represent different strategies in the gaming industry, with Roblox focusing on user-generated content and Take-Two relying on established franchises [1][2] Summary of Roblox (RBLX) - Roblox has shown significant growth, with a 41% year-over-year increase in daily active users (DAUs) to 111.8 million and a 58% rise in engagement hours to 27.4 billion [2][3] - Financially, Roblox's bookings increased by 51% year-over-year to $1.4 billion, with notable growth in the APAC region at 75% [3] - The platform has a record 23.4 million monthly unique payers, up 42% year-over-year, indicating strong monetization potential [3] - Roblox is innovating with AI-driven tools and expanding into various game genres, creating a robust ecosystem for creators [4] - Despite its growth, Roblox reported a loss per share of 41 cents in Q2 2025, highlighting ongoing profitability challenges [5] Summary of Take-Two Interactive (TTWO) - Take-Two started fiscal 2026 strong, with first-quarter net bookings of $1.42 billion, leading to an increased full-year outlook of up to $6.15 billion [6][7] - Key franchises like NBA 2K and Grand Theft Auto continue to drive revenue, with NBA 2K25 selling over 11.5 million units and recurrent spending rising by 48% [8] - Take-Two's release pipeline includes ambitious titles such as Mafia: The Old Country and NBA 2K26, positioning the company for potential record net bookings in fiscal 2027 [9] - The company benefits from a diversified revenue stream through both console and mobile games, enhancing its growth potential [6][8] Market Performance - RBLX stock surged 198.9% over the past year, significantly outperforming the industry growth of 29.3%, while TTWO shares rose 60.2% in the same period [7][16] - RBLX is trading at a forward price-to-sales ratio of 12.42X, above its median of 7.65X, while TTWO's ratio is 5.91X, above its median of 4.71X [19] Comparative Analysis - While Roblox excels in user growth and a unique ecosystem, it faces profitability and volatility challenges [22] - Take-Two's balanced strategy with proven franchises and a strong release slate provides a more stable growth trajectory and visibility [22]

Group 1 - Roblox Corporation (NYSE:RBLX) is included in the Renaissance Technologies Portfolio as one of the 10 biggest stocks [1] - JPMorgan raised the price target for Roblox Corporation to $160 from $150, maintaining an Overweight rating [2] - The increase in engagement on Roblox's platform during Q2 was driven by the game "Grow a Garden," with expectations for continued momentum in Q3 due to upcoming games [2][3] Group 2 - Concurrent users on Roblox reached 43 million in late August, surpassing the previous record of 32 million [3] - JPMorgan anticipates that the strong platform engagement will lead to a 'healthy upside' to management's guidance for Q3 [3] - The stock has gained 130% year-to-date as of September 23, 2025 [4]

Core Insights - Roblox Corporation (RBLX) highlighted the effectiveness of its discovery engine, which significantly contributed to record engagement levels in Q2 2025, with 111.8 million daily active users, a 41% year-over-year increase, and 27.4 billion engagement hours, up 58% from the previous year [1][8] Engagement and Monetization - The discovery system has been crucial for driving cross-experience engagement, with over 75% of players of the viral game "Grow a Garden" engaging with at least one additional Roblox title on the same day, and more than half of the quarter's spending growth coming from experiences outside the top 10 rankings [2] - The company is refining discovery signals to enhance transparency for developers, focusing on maximizing long-term user value and supporting a healthier ecosystem through initiatives like sponsored tiles and the Creator Rewards program [3] Safety and Trust - Roblox is advancing its safety agenda with the rollout of RoGuard 1.0, an open-source toolkit for establishing guardrails around large language models, along with new privacy and screen-time controls, reflecting a commitment to maintaining trust while scaling engagement [4] Market Aspirations - Roblox aims to capture 10% of the $180 billion global gaming content market, positioning its discovery engine as a structural growth lever that extends engagement beyond a few viral titles and enables smaller developers to gain traction [5] Stock Performance and Valuation - Roblox shares have increased by 30.6% over the past three months, outperforming the industry average rise of 12.8%, while other industry players like Boyd Gaming, DraftKings, and Monarch Casino have seen gains of 7%, 2.4%, and 19.7%, respectively [6] - The stock is currently trading at a forward 12-month price-to-sales (P/S) multiple of 12.89X, significantly above the industry average of 3.28X, with competitors like Boyd Gaming, DraftKings, and Monarch Casino having P/S ratios of 1.85X, 3.04X, and 3.33X, respectively [9] Earnings Outlook - The Zacks Consensus Estimate for Roblox's 2025 loss per share has widened from $1.36 to $1.71, indicating increased caution among analysts regarding the company's near-term earnings profile, with projections suggesting an 18.8% decline in 2025 earnings [11]

Group 1: Roblox Performance - Roblox is experiencing significant growth with player counts showing triple-digit year-over-year growth rates, despite August typically being a slow month for the gaming industry [1][2] - The platform is benefiting from several "megascale experiences" that consistently attract millions of players, including titles like "Grow a Garden," "Steal a Brainrot," and "99 Nights in the Forest" [2] - Roblox stock is rated as outperform with a price target of 130, and it rose nearly 2% to 135.18 in midday trades [2] Group 2: Electronic Arts Performance - Electronic Arts (EA) is receiving positive feedback for its upcoming game "Battlefield 6," which is set to release on October 10, and is anticipated to be a major title for the industry [3] - EA's "Madden NFL 26" has also garnered positive feedback since its release on August 14 [4] - EA stock ranks third out of 25 stocks in the Computer Software-Gaming industry group, with an IBD Composite Rating of 77 out of 99, while Roblox ranks fourth with a Composite Rating of 75 [5]

Core Insights - Roblox Corporation is heavily investing in artificial intelligence to drive sustained growth, reporting 111.8 million daily active users, a 41% increase year-over-year, and 27.4 billion hours of engagement in Q2 2025 [1][10] - The company's generative AI model, Cube 3D, has generated over 1 million models, facilitating easier content creation and lowering entry barriers for new developers [2][10] - AI enhancements are improving search, discovery, and personalization, which is crucial for connecting players with relevant content and ensuring broad-based creator monetization [3][10] - Roblox is also implementing safety innovations like RoGuard 1.0 to address trust and safety concerns, reinforcing its leadership in the user-generated gaming economy [4] - With a 51% increase in bookings and raised fiscal 2025 guidance, AI tools are becoming structural catalysts for Roblox's growth strategy [5] Competitive Landscape - Unity Software Inc. is a direct competitor, offering AI-assisted creation tools that enhance development cycles across various gaming platforms [6] - Electronic Arts Inc. is also exploring AI for game design and personalization, potentially enhancing player experiences in its major franchises [7] Financial Performance - Roblox's stock has increased by 39.7% over the past three months, outperforming the industry average rise of 18.3% [8] - The Zacks Consensus Estimate for Roblox's 2025 loss per share has widened from $1.38 to $1.71, indicating increased caution among analysts regarding the company's near-term earnings [11] - Currently, Roblox is trading at a forward price-to-sales multiple of 12.59X, significantly above the industry average of 3.29X [12]

Core Insights - The game "Grow a Garden" has significantly boosted Roblox's popularity, leading to record highs in stock performance this year, with over 22 million concurrent players, surpassing Fortnite's previous record of 15 million [1][2] - Increased gaming activity translates to higher purchases of Roblox's virtual currency, Robux, which supports sales growth and attracts more advertisers, presenting long-term growth opportunities for the company [2][12] - Roblox's stock has more than doubled in value this year, increasing approximately 120% since January [3] Business Performance - Roblox generated $2.1 billion in revenue in the first half of the year, marking a 25% increase from the same period last year, although operating losses also rose from $540 million to $577 million [9] - The stock recently reached an all-time high, trading at around 21 times its trailing revenue, indicating potential resistance at high valuations [11] Future Growth Potential - The excitement surrounding "Grow a Garden" may provide lasting benefits for Roblox, similar to the long-term popularity of Farmville, although the gaming landscape is competitive with many user-created games [6][7] - Roblox's advertising initiatives, such as video ads that reward users, could enhance growth and improve overall margins, potentially leading to profitability in the future [12][13]

Core Insights - The 3D content industry is significantly influenced by Unity Software Inc. and Roblox Corporation, both of which have shown substantial stock movements in 2025 [1][2][3] Group 1: Unity Software Inc. (U) - Unity has rebounded strongly after a restructuring phase, driven by growth in ad-tech and cost discipline [2][4] - Unity's game engine powers nearly 50% of mobile and indie titles, with expanding adoption in automotive, architecture, and film industries [5][8] - The Vector ad platform has shown 15% sequential revenue growth in Q2 2025, with expectations for mid-single-digit growth in Q3 [6][7] - Unity maintains a dominant position in game development, with approximately 70% of top mobile games built on its platform, providing a data advantage [8] - The Zacks Consensus Estimate for Unity's 2025 EPS indicates a year-over-year increase of 146.4% [15] Group 2: Roblox Corporation (RBLX) - Roblox has experienced significant growth, with Q2 2025 bookings increasing by 51% year-over-year and daily active users rising by 41% [9][10] - The company ended Q2 2025 with $942 million in free cash flow and raised its full-year bookings guidance to nearly $6 billion [11] - Despite impressive growth, Roblox faces legal controversies and operational challenges, including regulatory scrutiny and the need for continued investment in infrastructure [12][13][14] - The Zacks Consensus Estimate for Roblox's 2025 loss per share is projected at $1.71, widening from previous estimates [16][17] - Roblox's stock has surged 182.7% over the past year, but it carries a higher forward sales multiple of 11.92X compared to Unity's 8.76X [18][21] Group 3: Comparative Analysis - Unity is viewed as better positioned due to a balanced mix of growth potential, improving profitability, and diversification beyond gaming [22] - Roblox, while showing impressive user growth, is facing widening losses and regulatory risks, leading to a Zacks Rank of 4 (Sell) compared to Unity's 3 (Hold) [23]