Roblox Stock Shot Up 13% After Company Surpassed Its Own Expectations In Q4 – So, Why Are Analysts Divided?

The gaming company reported a loss of $0.45 per share in Q4 on revenue of $2.22 billion, compared to Wall Street estimates of a loss of $0.47 per share on revenue of $1.79 billion.

• BofA acknowledged that the company significantly outperformed its estimate, but the firm reduced its price target to reflect a broad de-rating in growth stocks.
• BMO Capital analysts raised their price target for RBLX to $160 from $155, highlighting Roblox’s investments in AI as well as the development of over 400 models on the company’s platform.
• Piper Sandler reduced its price target on the company to $100 from $125, noting that while Roblox reported a YoY surge in bookings, they still decelerated 70% sequentially.

Roblox Corp. (RBLX) shares were up nearly 13% in Friday morning’s trade after the company’s fourth-quarter (Q4) results surpassed Wall Street expectations.

The company reported a loss of $0.45 per share in Q4 on revenue of $2.22 billion, beating Wall Street estimates of a loss of $0.47 per share on revenue of $1.79 billion.

Roblox Reports Surge Across Key Metrics

Roblox reported a 43% year-on-year increase in its revenue and a 63% YoY surge in its bookings during the quarter, exceeding the company’s own expectations.

The gaming company’s gains during the quarter were driven by an addition of about 60 million daily active users (DAU) when compared to the same period a year ago.

Looking ahead, the company sees an even larger growth opportunity in the over-18-year-old demographic. Roblox stated that it currently reaches fewer than 10% of U.S. adults aged 18 to 34. It noted that this cohort is growing at over 50%, and that monetization in this group is 40% higher than in other groups.

Explaining how it aims to capitalize on this opportunity, Roblox said it plans to help create games by expanding into new genres, with a look and feel that differs from its classic games.

“Looking ahead, we are confident in our vision to connect one billion users and capture 10% of the global gaming market,” said Roblox founder and CEO David Baszucki.

Wall Street Is Divided

Despite Roblox beating analyst expectations, Wall Street is divided about the company’s prospects.

According to TheFly, analysts at BofA trimmed their price target for Roblox to $165 from $171, while keeping a ‘Buy’ rating. While it acknowledged that the company significantly outperformed its estimate, it reduced its price target to reflect a broad de-rating in growth stocks.

BMO Capital analysts raised their price target for RBLX to $160 from $155, while keeping an ‘Outperform’ rating. The firm cited Roblox’s investments in AI and the development of over 400 models on its platform.

However, Piper Sandler reduced its price target for the company to $100 from $125 while maintaining an ‘Overweight’ rating. The firm stated that while Roblox reported a YoY surge in bookings, bookings still decelerated by 70% sequentially.

How Did Stocktwits Users React?

Retail sentiment around Roblox trended in the ‘bullish’ territory at the time of writing, with message volumes at ‘extremely high’ levels.

One bullish user noted that RBLX stock should be “way up” from its current levels.

RBLX stock is down 19% year-to-date and 2% over the past 12 months.

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