Roblox is at an inflection point and could see its stock price more than double from here, according to Morgan Stanley. Analyst Mathew Cost upgraded the online game platform to overweight from equal weight and lifted his price target by $27 to $65, suggesting 26.4% upside. He also hiked his bull case to $110, which implies the stock could jump more than 113%. Roblox is up 12.5% this year, jumping more than 22% over the past month after beating earnings expectations and increasing its full-year bookings guidance on Oct. 31. “RBLX is proving that its [user-generated content]-platform can drive accelerating share gains, as it reaches larger/more diverse audiences across more platforms,” Cost said in a Monday note to clients. “Micro milestones leave us confident in its ability to execute from here and exceed expectations.” RBLX YTD mountain Roblox performance this year. The analyst thinks consensus expectations “underappreciates the potential” for Roblox to exceed it 20% bookings growth targets as it continues to grow its audience. The company’s non-console business comprised 92% of its overall business and grew 28% year over year in the third quarter. That’s nearly 10 times faster than the game market this year and the highest level since peak Covid in 2021, he noted. Roblox’s recent success can be attributed to it launching onto PlayStation in October of last year, adding to Costs’ confidence in the company’s ability attract a larger, more diverse audience over time. “The broad-audience, aged-up bull case for RBLX is now playing out,” Cost said. “This not only means that RBLX can increase its [total addressable market] by ~$45bn (or 30%) by competing on console, but also suggests that its unique UGC flywheel can continue gaining share on mobile and PC.” In the long run, Cost said Roblox’s improvements in search and discovery, as well as optimization of the in-game economy (including virtual currency for players within a game), helped drive its 34% year-over-year bookings growth and near-record levels of time spent per user in the fiscal third quarter. Analysts are generally bullish on the stock. LSEG data shows Roblox is has buy or strong buy ratings from 20 of 33 analysts covering it.
