Roblox (RBLX) Stock Tumbles as Top Analyst Says the Party’s Over

TLDR

• Jefferies downgraded Roblox to Underperform (Sell equivalent) from Hold on Monday, keeping its price target at $38.
• That target implies 18% downside from Friday’s closing price of $46.44.
• The downgrade follows a 30% rally since Roblox’s second-quarter earnings, which Jefferies calls “overly optimistic.”
• Analyst James Heaney compares Roblox’s investment cycle to Meta’s 2017-2019 margin squeeze.
• Wall Street remains split: Morgan Stanley has an Overweight rating and $55 target, while the average target sits at $49.34.

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Roblox stock dropped Monday after a fresh downgrade from Jefferies. The stock fell 4.6% to $44.30 in premarket trading, adding to Friday’s 4.9% decline.

Roblox Corporation, RBLX

Jefferies cut its rating to Underperform from Hold. That’s the equivalent of a Sell call.

The firm kept its price target at $38. That number sits 18% below Friday’s closing price of $46.44.

Roblox stock has climbed 30% since the company posted second-quarter earnings on July 30. But shares are still down 43% for the year.

Jefferies analyst James Heaney says that rally has gotten ahead of itself.

Why Jefferies Turned Bearish

Heaney argues the stock’s gains reflect an overly optimistic read on Roblox’s 12-month bookings trajectory. He thinks the platform’s user and bookings improvements in the U.S. and Canada will take longer and cost more than investors expect.

“The magnitude of current investments against soft bookings trends will pressure margins,” Heaney wrote in his note. He flagged that Roblox may need to keep spending heavily even as bookings growth slows.

Heaney drew a comparison to Meta Platforms between 2017 and 2019. During that stretch, Meta ramped up spending on trust and safety while revenue growth slowed around the Instagram Stories shift.

“RBLX is similarly in investment mode,” he said.

Jefferies also pointed to how Roblox’s U.S. and Canada user growth happened. Daily active users jumped from roughly 20 million in early 2025 to a peak of 26 million in the third quarter. Jefferies says viral hits like Grow a Garden and Steal a Brainrot drove that spike, but many of those users churned out quickly.

The Numbers Behind the Call

Roblox’s new content algorithm now favors games with strong long-term retention. Jefferies thinks that will slow short-term user growth over the next few quarters.

The firm said it’s tough to see daily active users climbing back above 25 million until the algorithm proves it can expand into new game genres and pull in more users over 18.

Total bookings, Roblox’s key revenue metric, rose 8% to $1.57 billion in the second quarter. That came in at the low end of the company’s own guidance range of $1.55 billion to $1.61 billion.

Roblox has guided third-quarter bookings between $1.58 billion and $1.65 billion. That range would mark a decline of 14% to 18%.

Barron’s added Roblox as a stock pick back on November 25, 2025. Shares have fallen 49% since that call.

Not every analyst agrees with Jefferies. Morgan Stanley’s Matthew Cost said on September 14 that Roblox is showing “encouraging” signs of expanding its addressable market through AI creation tools, advertising, and subscriptions.

Morgan Stanley rates Roblox Overweight with a $55 price target, well above the current share price.

Across 32 firms tracked by FactSet, Roblox carries an average Overweight rating and a $49.34 price target. That breaks down to 15 Buy ratings, 14 Hold ratings, and three Sell ratings.

Jefferies also called out newer viral titles like Steal an Egg, saying they’re unlikely to bring in fresh audiences the way earlier hits did.