Roblox rose about 7 percent today, its first real bounce after a steep month-long slide that has wiped out a third of its value. We think this is mostly a partial recovery from an overreaction to the company's recent warning that stricter age checks are slowing down its growth.
Our view
A drop this size is difficult to stomach, but the core of the business is still growing and generating plenty of cash. If you have been thinking about buying, the current price is a much more reasonable entry point than it was a month ago.
Several law firms are reminding investors of a deadline this Friday to join a lawsuit against the company. The suit claims that management made misleading statements about how changes to the platform's age verification and discovery tools would affect its growth and revenue. These types of lawsuits are common after a stock price drops sharply. While they can take years to resolve and are often settled for amounts covered by insurance, they are worth watching if they reveal new details about how the business is performing.
Oppenheimer established a $50 price target for the stock, suggesting they believe the company is worth significantly more than its current price of about $36. This comes as the stock has struggled following recent financial results.
While the target is optimistic, it is roughly in line with the average analyst target of $49. It suggests that despite recent setbacks in how the company makes money from its users, some analysts still see a path to recovery based on its large and growing user base.
MoffettNathanson lowered its price target from $50 to $40. This reflects a more cautious view of the company's ability to grow its bookings, which is the total amount of virtual currency users buy to spend in the game.
The cut follows recent data showing that changes to how users discover new games on the platform may be hurting how much they spend. While the new target is still slightly above the current stock price, it signals that analysts are losing confidence in the company's near-term growth story.
Wells Fargo cut its price target from $56 to $46. The move comes after the company shared a cautious outlook for the rest of the year, driven by changes in how its recommendation algorithms work.
When a platform changes its algorithm, the math that decides which games a user sees first, it can have an immediate impact on how much time and money people spend. Wells Fargo's lower target suggests they expect these disruptions to weigh on the company's results for at least several more months.
Wedbush downgraded the stock to Neutral and set a $40 price target, a sharp drop from their previous $65 target. The firm is concerned that new age-verification rules are making it harder for new users to join and stay active on the platform.
This is a meaningful shift in tone from a previously bullish firm. It signals that the friction from these safety measures might be a lasting drag on growth rather than a quick fix, making it harder to predict how the business will perform over the next few quarters.
Analysts recently issued a wave of downgrades and lowered price targets for Roblox. While 16 of 37 analysts still recommend buying the stock, the average target of $49 suggests it could rise 30% from its current price.
Average target$49.47+30%vs $37.95 today
TodayAvg price
Low $30High $95
Hold37 analysts
3Bearish
18Neutral
16Bullish
FirmRatingPrice TargetDate
Oppenheimer
Outperform
$50
8/4/2026
MoffettNathanson
—
$50→$40
8/3/2026
Wells Fargo
Overweight
$56→$46
8/3/2026
Macquarie
Neutral
$37
7/31/2026
Morgan Stanley
Overweight
$62→$55
7/31/2026
Wedbush
Neutral
$40
7/31/2026
UBS
Neutral
$33
7/31/2026
UBS
Neutral
$49→$45
7/31/2026
Needham
Buy
$50
7/31/2026
Piper Sandler
Neutral
$47
7/31/2026
BTIG
Sell
$30
7/31/2026
Deutsche Bank
Hold
$38
7/31/2026
Roblox earnings
Management has a perfect record of beating earnings estimates over the last two years, which suggests they are consistently conservative with the bars they set for themselves.
Earnings history
EstimateBeatMiss
Roblox past earnings results
Expected
Actual
Surprise
EPS
$-0.34
$-0.26
+24.4%
Revenue
$1.60B
$1.56B
-2.7%
Key highlights
Bookings growth slows: Bookings grew 8% to $1.5 billion, which was at the low end of what management expected and a sharp drop from the 43% growth seen last quarter. The company blamed the slowdown on a shift in player habits and changes to its recommendation system that favor keeping people playing longer over making money immediately.
Older user traction: Users between the ages of 18 and 34 grew 42% in the U.S., a group that now makes up about one third of all users who have verified their age. These older players are valuable because they spend 50% more than users under the age of 18.
Infrastructure spending rises: Costs for infrastructure and safety jumped 54% to $236 million as the company spent more on artificial intelligence and marketing its safety features. This increased spending helped push the total loss for the quarter to $185 million, though this was an improvement from the $280 million loss a year ago.
Cash flow generation: Free cash flow, which is the cash left over after paying for operations and equipment, grew 66% to $294 million. The company is using this cash to buy back its own shares, spending $380 million to repurchase 8.2 million shares during the quarter.
Weak outlook ahead: Management expects bookings to decline between 14% and 18% in the next quarter, a major shift from the growth seen in previous years. The company also expects to lose money on a cash basis next quarter, with free cash flow projected between a loss of $60 million and a gain of $5 million.
Our take: This was a difficult quarter that signals a major transition for the business. While the growth in older, higher-spending users is a clear win, the projected double-digit drop in bookings next quarter is a serious red flag. We are seeing the cost of pivoting to a safer, more AI-driven platform hit the bottom line today.
Roblox’s next earnings date
Q3 2026
OCT
29
Expectation
EPS
$-0.39
Revenue
$1.64B
Metrics we are tracking
Metric
Expectations
Status
Bookings Growth
Sustaining year-over-year growth above 25%
8% YoY in Q2 2026
Older User Growth
18-34 year old DAU growth staying above 40%
42% YoY for 18-34s in Q2 2026
FCF Margin
Maintaining free cash flow margin above 15% of bookings
19.6% of bookings in Q2 2026
Hours per DAU
Engagement staying above 2.3 hours per user per day
