Is Roblox Still a Buy at These Levels?

The question of whether Roblox (RBLX) remains a compelling long-term investment hinges on a delicate balance between its explosive growth metrics and the persistent valuation risks tied to its unprofitable operations. As the metaverse and AI-driven gaming sectors evolve, Roblox's strategic bets on infrastructure, user demographics, and creator tools position it as a potential leader-but at what cost?

Financials: Growth Outpaces Profitability

Roblox's 2025 financials underscore a company in hypergrowth mode. Q2 2025 revenue hit $1.1 billion, a 21% year-over-year increase, while daily active users surged 41% to 111.8 million. For context, the company's trailing twelve-month revenue reached $6.4 billion, supported by an 82.7% gross margin. However, profitability remains elusive. Q3 2025 saw a $257 million net loss despite $1.36 billion in revenue, as operating expenses rose over 25% year-over-year. This pattern reflects a classic growth stock dilemma: investors are betting on future monetization rather than current earnings.

The stock's price-to-earnings (P/E) ratio of -68.0909 highlights this disconnect. While negative P/E ratios are common for unprofitable growth companies, they also signal that the market is pricing in speculative expectations. With a market cap of $67.58 billion supported by a robust valuation, Roblox's valuation is roughly 10 times its LTM revenue-a premium to many traditional gaming peers but in line with high-growth tech stocks.

Growth Drivers: AI, Demographics, and Monetization

Roblox's long-term appeal lies in its ability to adapt to shifting trends. The platform's user base is rapidly aging: 60% of users are now 13+, with this cohort growing 54% year-over-year in Q2 2025. This demographic shift is critical, as older users tend to spend more on virtual goods and services. The company is also leveraging AI to enhance its creator ecosystem. Tools like Cube 3D and Roblox Assistant enable developers to generate 3D assets and code more efficiently, reducing barriers to entry and accelerating content creation.

Moreover, Roblox's AI infrastructure now supports over 400 systems for discovery, safety, and content moderation. These investments not only improve user experience but also address regulatory concerns around online safety-a growing priority for platforms with large youth audiences. Analysts argue that such strategic spending, though costly in the short term, could solidify Roblox's dominance in the AI-driven gaming space.

Competitive Positioning: A Unique Ecosystem

Roblox's competitive edge stems from its hybrid model: a blend of user-generated content (UGC), AI-powered tools, and a robust monetization framework. While competitors like Epic Games and Unity focus on enterprise solutions or AAA titles, Roblox has cultivated a creator-first ecosystem where over 1.5 million developers generate revenue through virtual currency. This flywheel effect-where growth in DAUs drives more content which in turn attracts more users-creates a self-reinforcing cycle.

However, the market is not without threats. Emerging platforms are experimenting with blockchain-based economies and immersive VR experiences. Yet, Roblox's first-mover advantage in AI-driven creation and its 10% target for global gaming market share suggest it remains a formidable player.

Valuation Risks: Can Growth Justify the Price?

The primary risk for investors lies in the gap between Roblox's current losses and its aspirational growth. A $67.58 billion market cap implies that Wall Street expects the company to achieve profitability and sustain its revenue growth well into the future. But history shows that high-growth tech stocks are vulnerable to macroeconomic shifts and changing investor sentiment. For instance, a slowdown in user acquisition or a failure to monetize the 13+ demographic could trigger a valuation correction.

Additionally, the company's reliance on bookings which surged 70% to $1.92 billion in Q3 2025 as a proxy for revenue raises questions. Bookings represent future revenue from virtual currency sales, which are subject to user spending volatility. If Roblox's monetization strategies-such as expanding into e-commerce or live events-fail to gain traction, the path to profitability could be prolonged.

Conclusion: A High-Risk, High-Reward Proposition

Roblox's long-term growth potential is undeniable. Its AI-driven tools, expanding user base, and strategic investments in safety and infrastructure position it as a leader in the next phase of digital gaming. However, the stock's valuation reflects aggressive expectations. For investors with a multi-year horizon and a tolerance for volatility, Roblox could still be a buy-but only if they're prepared to weather ongoing losses and macroeconomic headwinds. The key will be whether the company can convert its bookings into sustainable profits while maintaining its growth trajectory.