Hedgeye Boosts Roblox to Long Idea with $150-$175 Price Target

Hedgeye has added Roblox as a new long idea with a potential price target of $150 to $175 this year. The firm believes the stock has the potential to rebound following last week's weakness.

Roblox Corporation (NYSE: RBLX) has recently faced significant challenges, including regulatory scrutiny and safety concerns, which have impacted its stock performance. Despite these issues, Hedgeye has added Roblox as a new long idea with a potential price target of $150 to $175 for the year, suggesting that the stock may rebound following recent weakness.

The company has been under investigation by the U.S. Securities and Exchange Commission (SEC) since October 2024, with the probe concluding in May 2025. The investigation raised concerns over undisclosed findings and regulatory risks [2]. Additionally, Roblox has faced persistent child safety controversies, including over 13,000 exploitation reports and legal challenges from the Louisiana Attorney General [3]. These issues have damaged Roblox's reputation and regulatory compliance costs, while also raising questions about the company's long-term financial health and investor confidence [2].

Despite these challenges, Roblox has taken steps to address safety concerns, such as open-sourcing its AI system, Roblox Sentinel, which has contributed to approximately 1,200 reports of potential child exploitation to the National Center for Missing and Exploited Children in the first half of 2025 [1]. However, these efforts have not been enough to fully restore investor confidence, as the company's stock price has struggled to gain traction despite a large user base.

Oppenheimer & Co. has maintained an Outperform rating on Roblox stock, with a $158.00 price target, acknowledging the platform's social and viral nature as a double-edged sword. The firm identified "Schlep Gate" as a significant near-term risk, but also noted that Roblox's strong user growth and financial performance could drive future success [1]. Other analysts, such as Canaccord Genuity, have raised their price targets and maintained a Buy rating, citing strong second-quarter results and AI-driven enhancements that have improved user engagement [1].

Investors must weigh the competing narratives of Roblox's potential as a digital advertising pioneer and its susceptibility to regulatory and reputational headwinds. The company's recent safety measures and partnerships with law enforcement signal a commitment to addressing concerns, but these efforts may not be enough to fully restore confidence.

For long-term investors, the key question is whether Roblox can balance innovation with accountability. The SEC's investigation, while closed, may have set a precedent for heightened scrutiny of tech platforms targeting minors. Additionally, the company's financials—characterized by growing revenue but persistent losses—highlight the risks of overreliance on user growth without a clear path to profitability.

References:
[1] https://www.investing.com/news/analyst-ratings/oppenheimer-maintains-outperform-rating-on-roblox-stock-amid-platform-abuse-concerns-93CH-4195211
[2] https://www.ainvest.com/news/assessing-roblox-regulatory-reputational-risks-long-term-financial-implications-child-safety-controversies-sec-scrutiny-2508/
[3] https://www.mitrade.com/insights/news/live-news/article-8-1044144-20250815