Roblox's Rise May Encounter Turbulence, Warns Wedbush Analyst

Roblox Corporation operates a free platform for connection and communication, where users can create, play, work, and learn through immersive experiences built by a global community of creators. Wedbush analyst Daniel Ives believes that the company may face turbulence during its ascent, citing concerns over monetization strategies and increasing competition. Despite this, Roblox's live services have seen significant growth, with its platform consisting of the Roblox Client, Roblox Studio, and Roblox Cloud. The company's focus on user engagement and community building has contributed to its success, but Ives warns that these factors may be volatile in the short term.

Roblox Corporation (RBLX) is making significant strides in its creator-led ecosystem by scaling payouts, introducing new incentive structures, and broadening monetization channels. The company's strategy is centered on turning its vast community of developers into a sustainable growth engine, driving deeper engagement and more durable revenue streams [1].

At the heart of this strategy is the Developer Exchange program, which reached a new milestone in the second quarter of 2025. Roblox paid out $316 million to creators, marking a 52% year-over-year increase and nearly doubling the level from two years ago. The top 1,000 creators now average close to $1 million annually, while the top 10,000 bring in over $110,000 each [1].

Complementing these payouts is the rollout of the Creator Rewards Program, which shifts away from time-based incentives toward rewards tied to new user acquisition and organic traffic generation. This adjustment strengthens platform health by aligning creator incentives with Roblox’s broader growth goals [1].

Roblox is also expanding its monetization toolkit beyond in-game spending. The company is testing Rewarded Video ads in partnership with Google, giving developers a new way to monetize traffic while expanding advertising revenue potential. In July, Roblox launched its IP licensing marketplace, linking creators with major brands like Netflix, Sega, and Lionsgate. These partnerships not only open incremental monetization avenues but also deepen the platform’s appeal with branded content experiences [1].

These initiatives signal Roblox’s ambition to evolve from a purely engagement-led model into a more diversified monetization platform. With 23.4 million monthly unique payers (up 42% year over year) and average bookings per payer up 6%, the foundations are in place for Roblox to extract more value per user while continuing to share upside with its developer community [1].

Roblox's live services have seen significant growth, with its platform consisting of the Roblox Client, Roblox Studio, and Roblox Cloud. However, Wedbush analyst Daniel Ives believes the company may face turbulence during its ascent, citing concerns over monetization strategies and increasing competition. Despite this, Roblox's user engagement and community building have contributed to its success, but Ives warns that these factors may be volatile in the short term [2].

Roblox's stock has rallied 44.8% in the past three months, compared to the industry's rise of 20.6%. While other industry players like Boyd Gaming Corporation (BYD), DraftKings Inc. (DKNG), and Monarch Casino & Resort, Inc. (MCRI) have gained 13.9%, 30.9%, and 23.7%, respectively, Roblox's stock is currently trading at a premium with a forward 12-month price-to-sales (P/S) multiple of 11.34X [1].

The Zacks Consensus Estimate for Roblox’s 2025 loss per share has widened from $1.36 to $1.71 over the past 60 days, indicating that analysts have grown more cautious on the company’s near-term earnings profile. Roblox is likely to report dismal earnings, with projections indicating an 18.8% decline in 2025. Conversely, industry players like Boyd Gaming, DraftKings, and Monarch Casino are likely to witness growth of 5.2%, 226.7%, and 9.9%, respectively, year over year in 2025 earnings [1].

Roblox's recent safety-related controversies, including a lawsuit filed by Louisiana’s Attorney General alleging unsafe conditions for children on its platform, have highlighted the company's ongoing challenge to balance rapid growth and platform innovation with increasing regulatory attention and user protection efforts [3].

Roblox's outlook anticipates $9.5 billion in revenue and $848.6 million in earnings by 2028, implying a 33.2% annual revenue growth and a $1.8 billion increase in earnings from the current -$952.3 million. This forecast suggests a $142.32 fair value, a 21% upside to its current price [3].

References:
[1] https://www.nasdaq.com/articles/can-robloxs-creator-economy-unlock-its-next-phase-monetization
[2] https://gamerant.com/roblox-concurrent-user-count-breaks-all-time-record/
[3] https://simplywall.st/stocks/us/media/nyse-rblx/roblox/news/how-legal-moves-and-ai-tools-could-reshape-safety-perception