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B. Riley Financial set a target price of $51 for the stock, which is about 9 percent higher than where it trades now. This aligns with the average target across other Wall Street firms, which also sits at $51. This move comes just a few days after the company reported quarterly results that showed a slowdown in user growth. While the target suggests some room for the stock to rise, it reflects a cautious outlook on how quickly the platform can win over older users and grow its advertising business.
Source: B.Riley Financial
Roblox reported a mixed third quarter where it lost less money than expected but struggled to grow its business. The company lost 32 cents per share, which was better than the 43 cents analysts predicted. However, revenue of $1.57 billion missed the mark, and the stock fell about 19 percent following the news.
The most concerning part for long-term owners is that the platform is seeing fewer people show up and stay. Daily active users dropped 9 percent to 138 million, and the total hours people spent playing fell 15 percent. This is a sharp reversal for a company whose value depends on a growing network of players and creators. Management is leaning into artificial intelligence to speed up how quickly creators can build new games. While this could lead to more content eventually, it has not yet fixed the immediate problem of declining engagement. For a business that needs to prove it can keep growing beyond its core younger audience, these shrinking user numbers are a significant warning sign.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
After Roblox reported its October results, we cut our quality score to 3.0 out of 5 and lowered our ratings for sales growth, management, and returns on invested money. We moved our call on the stock from Watch to Avoid. We reset our projections for the money customers spend on the platform and how quickly older players join after bookings fell 12% in the quarter. We have added the company's reliance on generative AI tools and its shift toward paying for new users to what we track.
Roblox will share its latest financial results later today. Analysts expect the company to report revenue of about 1.63 billion dollars and a loss of roughly 43 cents per share. Beyond the headline numbers, the focus remains on how well the platform is attracting older users. We are watching for growth in the 18-to-34 age group and whether these users are spending more on virtual items and advertising than the younger audience.
Roblox is scheduled to report its latest quarterly results on October 29. Analysts are looking for revenue of about 1.63 billion dollars, but the most important numbers for the business will be its user growth and spending trends. For a long-term owner, the focus remains on whether the platform is successfully attracting older users. We will be watching for growth in the 18-to-34 age group and whether those older players are spending more on virtual currency than the younger audience.
Management has a long history of setting a low bar and clearing it with small beats, but recent drops in user numbers suggest the business is now slowing down faster than they can predict.
| Expectation | |
|---|---|
| EPS | $-0.50 |
| Revenue | $1.99B |