On Monday, BTIG adjusted its outlook on Roblox Corp. (NYSE: RBLX) shares, raising the price target to $51 from $47 while maintaining a Buy rating.
The revision follows Roblox's annual developers conference last Friday, where the company presented its intermediate Bookings and Daily Active Users (DAU) targets.
The conference also offered insights into Roblox's advertising and on-platform commerce strategies, which are expected to scale over the coming years.
Roblox's recent content discovery and landing page improvements, introduced early in the second quarter, are anticipated to contribute to faster Bookings growth due to enhanced user experience and increased engagement and monetization. The launch of Party mode, a new multiplayer experience slated for next month, is also expected to bolster these positive trends.
BTIG's analysis indicates that user growth is on a healthy trajectory, with DAU and Bookings growth outpacing previous forecasts and guidance. This has led to an increase in estimates and the price target for the stock, reflecting a more optimistic view for the second half of 2024 and into 2025.
The firm notes that the prohibition of programmatic calls to third-party services, which began in July or August, and the incentive for developers to drive user acquisition, with rewards based on the spend of new users starting in the first half of 2025, are additional factors supporting the stock's positive outlook.
The analyst firm views the developments emerging from the developers' conference as indicators of sustained top-line momentum for Roblox. It expects this trend to continue for at least the next few quarters before the impact of content discovery adjustments is fully realized.
Roblox's strategic initiatives are seen as drivers for continued growth, and the company's post-conference setup was particularly favorable for the stock's performance.
In other recent news, Roblox Corporation continues to show strong performance with its Q2 2024 earnings report revealing a 31% year-over-year increase in revenue, reaching $893.5 million.
The company's bookings also exceeded expectations at $955 million, marking a 22% rise from the previous year. The online gaming platform saw a record 79.5 million daily active users, with significant growth in Japan and India.
Roblox also announced the departure of CFO Mike Guthrie and the initiation of a search for his successor. Morgan Stanley (NYSE:MS) has updated its stance on Roblox, raising the price target to $38 from the previous $35, while maintaining an Equalweight rating on the stock.
Looking ahead, Roblox projects Q3 revenue to be between $860 million and $885 million, with bookings estimated between $1 billion and $1.025 billion.
The company also anticipates a consolidated net loss between negative $275 million and negative $255 million for Q3. For the full year, Roblox expects to raise its revenue guidance to between $3.49 billion and $3.54 billion, with bookings projected between $4.18 billion and $4.23 billion.
InvestingPro Insights
As Roblox Corporation (NYSE: RBLX) continues to advance its platform and attract attention from analysts, real-time data from InvestingPro provides a deeper financial perspective. The company's market capitalization stands at a robust $28.24 billion, underscoring its significant presence in the gaming industry. Despite a challenging profitability profile, with an adjusted P/E ratio of -26.26, Roblox has demonstrated impressive revenue growth of 29.81% over the last twelve months as of Q2 2024. This growth is a testament to the company's expanding user base and successful monetization strategies.
An InvestingPro Tip that aligns with BTIG's optimistic outlook is that analysts anticipate sales growth in the current year for Roblox. This aligns with the positive trends in Bookings and Daily Active Users (DAU) noted by BTIG, suggesting that the company's revenue streams have the potential to continue expanding. Additionally, Roblox's strong return over the last year, with a price total return of 50.43%, reflects the market's positive reception to its strategic initiatives and platform enhancements. For readers interested in a comprehensive analysis, there are 9 additional InvestingPro Tips available that delve into the nuances of Roblox's financial health and market performance.
For investors considering Roblox's stock, it's worth noting the company's recent price performance, with a 1-month price total return of 17.88% and a 3-month return of 22.48%. This indicates a robust short-term performance, which may be of interest to those looking for growth opportunities. To explore further insights and tips on Roblox, including in-depth financial metrics and analyst forecasts, visit InvestingPro at https://www.investing.com/pro/RBLX.
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