Needham Reiterates Buy Rating on Roblox, Raises PT to $159

Needham Reiterates Buy Rating on Roblox, Raises PT to $159

Needham Securities has reiterated its "Buy" rating on Roblox Corp. (RBLX) and raised the price target to $159, according to a recent report. The move follows strong second-quarter (Q2) earnings, which saw a 51% year-over-year (YoY) increase in bookings, surpassing expectations even of the most optimistic investors [2]. The stock has surged over 200% in the past year, reaching new 52-week highs, and currently trades at $139.

Roblox Corp. reported Q2 2025 financial results, exceeding revenue expectations with $1.1 billion in revenue compared to a forecast of $1.26 billion. Despite posting a larger-than-expected loss per share of $0.41, the company demonstrated strong user engagement and growth in bookings. Daily active users (DAUs) grew 41% YoY, addressing concerns about market saturation [2]. Additionally, second-tier games (ranked 11-50) grew 90% YoY, indicating strong ecosystem externalities where the hit status of the game "GAG" enhanced the success of other games rather than detracting from them.

Needham Securities noted that the company's Q3 bookings guidance, forecasting at least 41% growth, has outpaced predictions from BofA, Wall Street, and other enthusiastic investors. The firm has adjusted its 2025 forecasts, now predicting bookings of $6.064 billion and EBITDA of $1.409 billion, up from previous estimates of $5.593 billion and $1.241 billion, respectively [3].

Roblox Corp. operates a free-to-play online video game platform with approximately 85 million daily active users. The company's financial health is characterized by robust revenue growth but challenged profitability metrics. The company reported a trailing twelve-month revenue of $3.84 billion, reflecting a 23.7% growth over the past year. However, profitability remains a concern with an operating margin of -26.48% and a net margin of -22.94% [3].

Despite the challenges, Roblox's unique platform that empowers creators and fosters a vibrant community positions the company well within the interactive media industry. The company's ability to manage its leverage and sustain user engagement will be critical to its long-term success.

References:
[1] https://www.gurufocus.com/news/3022950/ubs-lowers-price-target-for-redwood-trust-rwt-while-maintaining-buy-rating-rwt-stock-news
[2] https://www.investing.com/news/analyst-ratings/roblox-stock-price-target-raised-to-159-from-133-at-bofa-securities-93CH-4164032
[3] https://www.gurufocus.com/news/3023290/roblox-rblx-price-target-raised-by-bofa-amid-strong-growth