Roblox Gets an Upgrade in a Rough Month. The Stock Is Rising.

Shweta Khajuria of Wolfe Research upgraded Roblox to Outperform and set a $150 price target. (Dreamstime)

Roblox was rising Friday after the gaming platform received an upgrade from one Wall Street analyst during an otherwise trying month.

Shweta Khajuria of Wolfe Research upgraded Roblox to Outperform, from Peer Perform and set a price target of $150 in a research note Friday. The company, Khajuria argued, can benefit from a genuine content flywheel and still has a large addressable market to penetrate.

Shares were rising 2.3% to $117.50 on Friday.

Roblox has had a banner year, with its stock roughly doubling in 2025. But August has been a rough month after the State of Louisiana sued the company, alleging Roblox has allowed child predators to abuse its platform, whose users are mostly under 18.

The stock has dropped about 16% since its all-time closing high on July 31, according to Dow Jones Market Data.

Wolfe’s Khajuria acknowledged the case in Louisiana as a potential downside risk for the company, but argued that Roblox has made progress improving its platform’s safety and that its fundamentals warranted an upgrade.

“We believe Roblox has a long runway for durable growth from low penetration in an attainable, large gaming [market],” Khajuria wrote. “Roblox is one of the fastest growing businesses in our coverage, and we see potential for meaningful margin expansion.”

One reason for the bullish outlook is the platform’s flywheel, Wolfe said. The company’s use of artificial intelligence has accelerated content velocity among the platform’s creators, resulting in more and higher-quality experiences that drive user engagement and spending.

In June, 28 of the top 200 experiences by total spend had been launched in the last year, up from 21 in June 2024, Khajuria pointed out.

“We expect to see a higher number of top hits emerge more frequently driven by improvements in search discovery and faster content velocity,” she wrote.

Pricing optimizations can also keep the flywheel spinning. Roblox has rolled out regional pricing that adjusts prices based on location, differential pricing that gives users various tiered options, and a tool for creators to recommend optimal prices for in-game items. These features can all boost bookings and earnings, Khajuria argued.

Advertising, still in its nascent stages on Roblox, should also drive growth, she said. As the company continues to roll out video ads, Wolfe estimates an additional $300 million in gross bookings in 2026 and $650 million in 2027, which would represent a 7% uplift in total bookings.

Write to Nate Wolf at nate.wolf@barrons.com