Roblox shares gain as Raymond James says ‘4Q trends shaping up well’

Investing.com — Raymond James analysts have raised their outlook for Roblox, citing strong user growth trends and a promising strategy around Robux purchases in their 4Q report. 

The analyst comments helped push Roblox shares more than 6% higher on Thursday.

With user growth continuing to track ahead of high expectations, the firm has increased its price target for the stock to $63 from $60.

“Roblox’s 4Q trends [are] shaping up well and giving confidence into year-end,” said the firm.

Raymond (NS:RYMD) James analysts noted that user growth, as measured by RoMonitor, has remained robust, showing figures in the low-to-mid 50% range year-over-year through 4Q. 

This continued momentum indicates potential for upside in the company’s earnings, particularly after a slight dip around last year’s PlayStation launch. 

They note that the dip, however, was short-lived, with user growth rebounding quickly.

Additionally, Roblox has implemented new deals incentivizing users to purchase Robux outside of app stores, offering discounts of 5-25%. 

These promotions are expected to improve margin dynamics, as they bypass platform fees from iOS and Google (NASDAQ:GOOGL) Play. “This could offer an interesting avenue for margin leverage as awareness spreads,” the analysts noted.

Given these positive developments, Raymond James raised its 4Q and 2025 estimates, anticipating a slight increase in bookings and EBITDA. 

The firm now projects bookings of $4.38 billion for 2024 and $5.30 billion for 2025, along with adjusted EBITDA of $776 million and $1.04 billion, respectively.

The analysts maintain a Strong Buy rating on the stock, with the revised price target based on future growth and margin improvement.