Roblox Corporation (NYSE: RBLX) experienced a sharp rally on Monday, with shares climbing 14.2% to $54.30 in afternoon trading after Arete Research issued a bullish upgrade on the video game platform. The stock reached an intraday high of $55.32, with trading volume surging to 10.2 million shares, lifting the company's market capitalization to $38.65 billion.
Arete's Bullish Call
Analyst David Mak of Arete Research upgraded Roblox to Buy from Neutral, raising the price target to $95 from $75. The firm stated that at $45, it would be a buyer, reflecting strong conviction in the stock's upside potential. Arete's 2027 bookings forecast now sits 5% above the consensus estimate, according to The Fly.
The $95 price target implies a market capitalization of approximately $67.6 billion based on current shares outstanding, representing a $29 billion increase from current levels. This valuation would place Roblox above major gaming peers such as Electronic Arts (NASDAQ: EA) and Take-Two Interactive Software (NASDAQ: TTWO), despite differences in business models and profitability.
Market Context and Valuation
At current levels, Roblox trades at roughly 5.2 times its 2026 midpoint bookings estimate of $7.47 billion and about 32 times its 2026 free cash flow guidance of $1.2 billion. At Arete's $95 target, those multiples would expand to approximately 9.1 times and 56 times, respectively.
Roblox's move stood out from the broader market and sector trends. Meta Platforms (NASDAQ: META) gained 2.7%, while the SPDR S&P 500 ETF Trust (NYSEARCA: SPY) rose 1.3%, indicating that Roblox's rally was driven by company-specific factors rather than a broad sector uplift.
Focus on Older Users
Roblox announced on Monday the selection of 26 teams for its inaugural Incubator group, a six-month initiative aimed at developing novel games targeting older users. The company noted that games from this group will benefit from a 42% increase in DevEx rates tied to in-game spending by verified U.S. players aged 18 and older. This initiative is part of a broader strategy to capture the older-player market, which Arete Research estimates to be worth $68 billion.
In the first quarter, users over 18 accounted for 26% of Roblox's age-checked daily active users. In the U.S., this group spent more than 50% above under-18 users, underscoring the economic potential of the demographic. CEO David Baszucki emphasized during the April earnings call that Roblox aims to set the global standard for safe, age-appropriate digital use, and the company has implemented global age checks on chat features.
Risks and Outlook
Despite the positive catalyst, risks remain. Safety-related changes could continue to weigh on user engagement before older-player games gain traction. TipRanks reported that Citi analyst Jason Bazinet pointed to RoMonitor data showing average peak concurrent users fell 5% in the week of June 15-21 compared to a year earlier, warning that Q2 bookings could come in near the low end of Roblox's forecast.
Roblox lowered its outlook in its first-quarter letter, now expecting 2026 bookings growth of 8% to 12%, down from previous guidance. The company also forecast free cash flow of $1.1 billion to $1.3 billion and indicated that Q2 daily active users would decline from Q1 levels.
According to Google Finance, the 12-month average price target for Roblox stands at $64.73, based on estimates from 23 Wall Street analysts, with a range from $45 to $100. Arete's $95 target sits near the top of that range and is roughly 47% above the consensus average.
