Quick Read
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Roblox (RBLX) crashed 29% on its worst trading day ever after guiding Q3 bookings to their first-ever year-over-year decline.
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The sell-off spread across gaming, dragging TTWO down 3% and the ESPO gaming/e-sports ETF down 4%, while BMO slashed its Roblox target from $100 to $45.
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Morgan Stanley kept an Overweight rating on RBLX at $55, arguing recovering engagement signals the long-term platform flywheel remains intact despite near-term monetization pain.
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Roblox (NYSE:RBLX) stock is down 29% to $34.47 in Friday morning trading, marking its worst single-day decline on record. The sell-off follows a string of analyst downgrades after the company reported second-quarter results that showed slowing bookings growth and issued weak third-quarter guidance.
Checking Roblox’s peers in the gaming sector, Electronic Arts (NASDAQ:EA) stock is flat at $209.88, while Take-Two Interactive Software (NASDAQ:TTWO) shares are down 3% to $240.06. The VanEck Video Gaming and eSports ETF (NASDAQ:ESPO) is down 4% to $93.83, offering a more diversified approach to gaming-sector exposure but still vulnerable to sharp moves in a concentrated fund.
Analyst Downgrades Flood In After Weak Guidance
Multiple firms cut their ratings on Roblox stock following the earnings report, with several moving to sell or neutral stances. Benchmark downgraded Roblox to Sell from Hold with a $33 price target, citing substantially below-expectations Q3 guidance and withdrawn annual outlook. The firm warned that the platform may be entering lifecycle decline as weakness broadens from new-user acquisition to monetization.
Meanwhile, BTIG downgraded Roblox to Sell from Neutral with a $30 price target, noting that investors now appreciate the second-order monetization impacts from recent algorithm changes. BTIG sees risk that feed adjustments result in engagement headwinds or a longer path to monetization improvement.
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Moreover, Deutsche Bank analyst Benjamin Black downgraded Roblox to Hold from Buy with a price target of $38, down from $56, calling the Q3 outlook disappointing and saying it materially reduces near-term visibility. Wedbush downgraded Roblox to Neutral from Outperform with a $40 price target, pointing to decelerating monetization driven by the under-13 cohort and zero visibility after the withdrawal of fiscal 2026 guidance.
