Citi Raises Roblox Price Target to $123, Maintains Buy Rating

Citi raised its price target for Roblox to $123 from $100 and maintained a Buy rating on the shares, citing "robust" third-party data and potential benefits from the US App Store ruling on the company's cost structure.

Citi has increased its target price for Roblox (RBLX) stock to $123, up from a previous target of $100, while maintaining a Buy rating. The decision is driven by strong third-party data, which suggests further potential for the shares to rise. Additionally, Citi anticipates that a recent ruling concerning the U.S. App Store could positively impact the company's cost structure.

According to Citi analysts, Roblox's equity has performed well since the first-quarter results. However, they still see upside potential. The analysts cited "remarkably robust" third-party data from RoMonitor and the potential benefit of lower platform fees after the April 30 ruling that Apple (NASDAQ:AAPL) must allow third-party payments. This ruling could significantly impact Roblox's cost structure, potentially boosting EBITDA by between $220 million and $600 million [3].

Roblox's strong user growth is another factor contributing to the optimism. The company reported a 26% increase in Daily Active Users (DAUs) to 97.8 million in the first quarter of 2025. This growth was particularly notable in regions like India (77%) and Japan (48%) [1]. Furthermore, the company's free cash flow surged by 123% year on year to $426 million, exceeding the high end of their guidance [1].

The European Commission's recent ruling against Apple, fining the company $580 million for violating the Digital Markets Act, could also have indirect benefits for Roblox. The ruling requires Apple to allow developers to steer users to make purchases outside of its app stores, which could reduce Roblox's platform fees [2].

Citi's new target price reflects around 50 times the 2026 free cash flow per share. The analysts noted that while Roblox stock has surged about 55% since its May 1 earnings report, there is still room for further gains. The stock is currently priced at $105.03, implying a downside of 21.18% from the current price [1].

The consensus recommendation from 34 brokerage firms is currently 2.2, indicating an "Outperform" status. The average target price for Roblox Corp (RBLX) is $82.79, with a high estimate of $126.00 and a low estimate of $30.00 [1]. GuruFocus estimates the GF Value for Roblox Corp (RBLX) in one year to be $85.20, suggesting a downside of 18.88% from the current price [1].

In conclusion, Citi's bullish outlook on Roblox is driven by robust user data, potential cost savings from the U.S. App Store ruling, and strong financial performance. The company's ability to continue growing its user base and maintaining high free cash flow makes it an attractive investment opportunity.

References:
[1] https://www.gurufocus.com/news/2971476/roblox-rblx-target-price-raised-by-citi-amid-optimism-rblx-stock-news
[2] https://www.pymnts.com/news/regulation/2025/apple-fights-580-million-app-store-fine-in-europe/
[3] https://finance.yahoo.com/news/roblox-stock-may-rally-further-154056616.html