Key Stats for Roblox Stock
- Current Price: $46.44
- Target Price (Mid): ~$86
- Street Target: ~$49
- Potential Total Return: ~85%
- Annualized IRR: ~15.5% / year
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What Happened?
Roblox Corporation (RBLX) closed down 0.3% on Thursday, September 24. That day, Meta Platforms unveiled Horizon Create and Horizon Studio, waitlist-only AI tools that turn a typed idea into a mobile game eligible for distribution across Facebook, Instagram, and Horizon. Unity Software fell as much as 6% intraday, and Take-Two Interactive closed down 1.6%. Roblox fell 4.89% to $46.44 on Friday, September 25, though reports differ on the cause. That left it down 42.7% in 2026.
Roblox’s own prompt-to-game tool, Build, has been in a limited public alpha since July 28. The bigger issue sits in its investor relations materials: Roblox is paying for AI while bookings are guided to shrink.
Q3 Guidance Pairs Rising AI Costs With Shrinking Bookings
Roblox guided Q3 bookings to about $1.58 billion to $1.65 billion, down 14% to 18% year over year. GAAP revenue is still guided up 4% to 10%, because it recognizes bookings from past quarters.
On the July 30 call, CFO Naveen Chopra said of Q3’s margin compression that “about half of that is just fixed cost deleveraging coming off the back of the bookings reduction, and the other half is related to these investments in AI.” He said those infrastructure costs are “largely being driven by model training,” so they behave more like fixed costs: sticky if bookings stay soft, leveraged if bookings grow.
Q3 free cash flow guidance of negative $60 million to positive $5 million, versus $294 million in Q2, isn’t all AI. It includes previously disclosed back-half-loaded capital spending ($170 million) and a roughly $40 million year-over-year working-capital headwind from the timing of creator payouts. TIKR consensus puts 2026 free cash flow around $911 million. After $890 million in the first half, that implies roughly $20 million for Q3 and Q4 combined.
Roblox ended Q2 with $6.1 billion in cash and investments against $1.009 billion of long-term debt, after about $380 million of Q2 buybacks. It is also starting to charge for AI. Build has paid tiers for power users, and CEO David Baszucki said the photorealistic mode’s infrastructure cost “will initially be offset by subscription.”
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The Mean Street Target Fell 67% in a Year, but Roblox Trades at 53x Forward Cash Flow
TIKR’s mean Street target fell from $148 on September 30, 2025, to around $49 as of September 25, about 5% above the share price. Ratings stand at 13 Buy, 4 Outperform, 16 Hold, and 2 Sell. Buy and Outperform combined edge holds only 17 to 16, down from 22 to 12 at the end of June.
Roblox trades at 53 times NTM free cash flow, versus about 25 times for Take-Two and 29 times for Nintendo. On calendar 2027 consensus free cash flow of around $1.2 billion, the multiple would be roughly 27 times. The premium depends on that rebound arriving.
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TIKR Advanced Model Analysis
- Current Price: $46.44
- Target Price (Mid): ~$86
- Potential Total Return: ~85%
- Annualized IRR: ~15.5% / year
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The mid-case realization is on December 31, 2030. It is a scenario, not a forecast.
- Growth: The mid case assumes around 14% a year for bookings (which TIKR’s model labels revenue) across its 2025 to 2035 window. That’s in line with the Street’s path from $6.788 billion in 2025 to around $12.9 billion in 2030, though only four analysts forecast 2030. Management highlighted two trends: Baszucki said the U.S. 18-to-34 cohort’s daily active users and hours are growing “at approximately 40% year-on-year,” and Chopra said Q2 daily active users in Japan grew 67%.
- Margins: The mid case keeps its net income margin input around -6%. Separately, consensus free cash flow margin on bookings rises from around 13% in 2026 to around 23% in 2030.
- Risks: Chopra’s view that retention gains will outweigh the bookings hit rests on “a few weeks of data” per experiment. Q3 loss guidance also excludes possible legal accruals, and Roblox has booked settlement costs this year tied to youth-related consumer protection and digital safety matters with certain states. If FY2027 bookings fail to grow, the $86 scenario is too high. If retention pays off early, 14% looks modest next to Baszucki’s stated conviction in long-term growth “in excess of 20%.”
Conclusion
Roblox is expected to report on October 29, though the company hasn’t confirmed the date. Because it now guides one quarter at a time, that report should also bring its Q4 outlook. Consensus sits at about $1.62 billion of Q3 bookings, near the guidance midpoint, and already assumes Q4 bookings fall about 9%. Q3 bookings at or above that midpoint, with free cash flow at breakeven or better, would show the spending running to plan. A Q4 outlook worse than a 9% decline would tell investors that Meta is the smaller of Roblox’s problems.
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Should You Invest in Roblox?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
