In a recent report, analysts from Wells Fargo expressed their bullish view on Roblox, highlighting that there is more to the platform than meets the eye. Led by Ken Gawrelski, the analysts initiated coverage on Roblox with an Overweight rating and set a price target of $49.
Shares of Roblox were trading at $43.11, up by 2.6% during the recent Wednesday trading session. Year-to-date, the stock has shown an impressive gain of 48%.
The analyst team views Roblox as more than just a gaming platform; it is seen as a growing audience platform with deep engagement. They believe that advertisement opportunities will play a significant role in boosting earnings over time.
The potential for advertisements is not fully factored into Wall Street's estimates for bookings and earnings. As a result, Wells Fargo has projected bookings for 2025 to be 7% higher than the consensus. Scaling the ad business will also contribute to margin expansion, according to the analyst team.
In the previous quarter, Roblox reported a smaller-than-expected loss and strong bookings, further boosting the confidence of Wall Street analysts. As per FactSet, 72% of analysts now rate Roblox as a Buy, compared to 52% in June.
Roblox continues to prove itself as more than just a game, attracting a growing audience and capturing deep engagement. With the potential for increased advertising revenue and positive analyst sentiment, the future looks bright for this platform.