Roblox Price Target Lowered, Analyst Remains Bullish on Stock (RBLX)

Roblox stock (NYSE:RBLX) plunged 15.51% to $113.00 yesterday, as earnings brought a wave of volatility. This sharp decline, a $20.74 drop from the previous close, comes as analysts shift targets following the print. While some analysts are tempering their short-term expectations, a longer-term bullish outlook persists.

The current trading price positions Roblox below its 50-day Simple Moving Average (SMA) of $129.57, signaling potential short-term weakness. However, the stock remains above its 200-day SMA of $93.47, suggesting underlying strength in the longer term.

Despite the recent price drop, some analysts remain optimistic about Roblox's future. Wells Fargo analyst Ken Gawrelski, for instance, recently trimmed the firm's price target for Roblox to $141 from $155, maintaining an “Overweight” rating. This adjustment reflects expectations of sustainable bookings growth, projected in the high-20s to low-30s percentage range year-over-year. However, Gawrelski also acknowledged the continued challenge of developing secondary revenue streams, a crucial factor for long-term profitability.

Goldman Sachs raised their price target from $155 to $180 following earnings. The stock experienced a significant decline on the same day, fueled by concerns over slowing bookings growth, especially in key markets like the U.S. and Europe. This divergence between analyst optimism and market sentiment highlights the inherent volatility and risk associated with investing in growth stocks like Roblox.

Looking ahead, analysts anticipate an earnings per share (EPS) of -$0.41 for the upcoming quarter, representing a 4.65% improvement from the same quarter last year. Revenue is projected to be $1.14 billion, a 23.39% increase year-over-year. These figures suggest that Roblox is making progress towards profitability, albeit slowly. Whether the company can consistently meet or exceed these expectations will be crucial for regaining investor confidence.