Roblox Plummets 5% as TD Cowen Cuts Price Target, User Growth Slows—Is the Meta Moment Fading?

Summary
• Roblox (RBLX) tumbles 5% intraday to $74.95, its lowest since May 2025
• TD Cowen slashes price target to $70 from $77, citing decelerating December user engagement
• Super League acquires stake in Top 100 Roblox game Hide or Die!, signaling platform's enduring appeal
• Technicals show RSI at 18.16 (oversold), MACD -4.95, and Bollinger Bands tightening toward $73.84 support
Roblox’s 5% selloff reflects a perfect storm: TD Cowen’s bearish revision, user growth fatigue, and a sector grappling with EA’s $55B private equity deal. The stock’s intraday range from $74.95 to $79.20 underscores volatile sentiment, with options activity surging as traders bet on a potential bounce or breakdown.

TD Cowen's Bearish Outlook Sparks Selloff
TD Cowen analyst Doug Creutz’s downgrade to $70 from $77, while maintaining a ‘Sell’ rating, ignited the selloff. Creutz highlighted a 74% YoY growth in December user hours (down from 99% in November) and attributed the slowdown to attrition from summer viral hits. Despite projecting Q4 bookings of $2.24B (17% QoQ), the target cut signaled waning confidence in Roblox’s ability to sustain hypergrowth. Meanwhile, Super League’s $570M-visited Hide or Die! acquisition offered a counterpoint, but failed to offset the bearish narrative as investors fixated on decelerating engagement metrics.

Video Gaming Sector Volatile Amid EA's Private Deal
The video gaming sector remains fragmented as EA’s $55B private equity buyout by Saudi PIF and Silver Lake reshapes market dynamics. While EA’s $210/share offer (a 35% premium) signals confidence in gaming’s long-term value, Roblox’s struggles highlight sector-specific risks. Unlike EA’s institutional backing, Roblox’s reliance on organic user growth and ad monetization leaves it vulnerable to engagement fluctuations. Microsoft (MSFT), the sector’s leader, rose 1.01% intraday, underscoring divergent trajectories between platform giants and niche players.

Options Playbook: Puts on the Move as RSI Hits Oversold Levels
• RSI: 18.16 (oversold)
• MACD: -4.95 (bearish divergence)
• Bollinger Bands: Lower bound at $73.84 (critical support)
• 200-day MA: $101.31 (far above current price)
• Turnover Rate: 1.67% (high liquidity)
Roblox’s technicals suggest a short-term rebound is possible, but the bearish trend remains intact. Key levels to watch: $73.84 (lower Bollinger Band), $70 (TD Cowen’s target), and $67.5 (put-heavy strike). The RSI’s oversold reading and MACD’s negative crossover hint at a potential bounce, but the 52W low of $50.10 looms as a tail-risk scenario.
Top Options Picks:
• RBLX20260116P72.5 (Put, $72.5 strike, Jan 16 expiry):
- IV: 47.44% (moderate)
- LVR: 83.17% (high leverage)
- Delta: -0.238 (moderate sensitivity)
- Theta: -0.016 (low time decay)
- Gamma: 0.049 (high sensitivity to price swings)
- Turnover: $41,209 (liquid)
- Payoff (5% downside): $7.55 (max(K - ST, 0) = $7.55)
This put offers asymmetric upside if RBLX breaks below $72.5, leveraging high gamma for rapid premium gains in a volatile environment.
• RBLX20260116P74 (Put, $74 strike, Jan 16 expiry):
- IV: 46.17% (moderate)
- LVR: 57.97% (high leverage)
- Delta: -0.318 (strong sensitivity)
- Theta: -0.002 (minimal time decay)
- Gamma: 0.058 (high sensitivity)
- Turnover: $27,264 (liquid)
- Payoff (5% downside): $9.05 (max(K - ST, 0) = $9.05)
This strike balances leverage and liquidity, ideal for a 5% downside scenario. Its high gamma ensures rapid premium appreciation if the stock gaps lower.
Hook: If $73.84 breaks, RBLX20260116P72.5 offers a high-gamma play for short-side momentum.

Backtest Roblox Stock Performance
The backtest of Roblox's (RBLX) performance after an intraday plunge of at least -5% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 56.37%, the 10-Day win rate is 56.16%, and the 30-Day win rate is 57.24%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return during the backtest was 7.67% over 30 days, suggesting that while there is some volatility, RBLX can exhibit reasonable recovery and even exceed pre-plunge levels.

Bull Case Fades—Short-Term Puts Gain Edge as RSI Hits 18
Roblox’s 5% drop reflects a bearish technical setup with RSI at oversold levels and MACD in negative territory. While a rebound to $79.20 is possible, the 52W low of $50.10 remains a lurking risk. Microsoft’s 1.01% gain highlights sector divergence, but Roblox’s user growth fatigue and TD Cowen’s bearish revision suggest caution. Traders should prioritize puts like RBLX20260116P72.5 and RBLX20260116P74 for a 5% downside scenario. Action: Buy puts if $73.84 breaks; target $70 as a key inflection point.