By Wallace Witkowski
Roblox Inc. shares rallied Monday after more analysts initiated positive coverage of the tween-centric social gaming platform, heralding it as a unique combination of several popular online genres.
Roblox /zigman2/quotes/223883423/composite RBLX +5.62% shares rose as high as $72.86 in morning trading, 8.2% higher than the previous closing price, and closed up 5.1% at $70.76. Shares are up 57% from their $45 reference price set back in March when Roblox made its public debut via direct listing and shares surged more than 50% on their first day of trading .
Analysts typically wait for a period after a stock has begun trading to publish research, especially if their banks worked on the offering in question. Analysts who chimed in Monday morning named price targets higher than the going rate for Roblox stock.
Morgan Stanley analyst Brian Nowak initiated an overweight rating on the stock and an $80 price target, and said Roblox’s unique offering of social media and gaming positioned it as a competitor against leading digital social/interactive entertainment platforms.
Nowak said that daily active users, or DAUs, of Roblox spent an average of 154 minutes a day on the platform, as compared with 40 minutes a day for Facebook Inc. /zigman2/quotes/205064656/composite FB -1.04% users and about 150 minutes a day for console gamers, and speaks to how Roblox “is blurring the lines between social and gaming.”
B of A analyst Ryan Gee initiated coverage with a buy rating and a $78 price target said Roblox “gives unique exposure to a large, growing mobile [total addressable market] with less-relative capital risk than traditional content creators.”
Gee said Roblox combined the social media aspects of Snap Inc. /zigman2/quotes/205087158/composite SNAP -2.11% and TikTok with the gaming aspects of Epic Games’ Fortnite, Activision Blizzard Inc.’s /zigman2/quotes/200717283/composite ATVI -1.42% Call of Duty and Take-Two Interactive Software Inc.’s /zigman2/quotes/204008930/composite TTWO +0.09% GTA Online and the content creation aspects of Unity, Twitch, and Alphabet Inc.’s /zigman2/quotes/205453964/composite GOOG -0.37% /zigman2/quotes/202490156/composite GOOGL -0.22% YouTube.
Truist analyst Matthew Thornton initiated the stock with a buy rating and a $78 price target saying he “liked the foundation” of the platform and that there were “significant nascent opportunities to build on the foundation.” Thornton said he believes Roblox could launch onto console platforms like Sony Corp.’s /zigman2/quotes/204878564/delayed SNEJF -0.10% /zigman2/quotes/201361720/delayed JP:6758 +1.03% /zigman2/quotes/208567357/composite SONY -0.39% PlayStation and Nintendo’s /zigman2/quotes/208063194/delayed JP:7974 +2.33% Switch, which would further grow its base.
Goldman Sachs analyst Michael Ng initiated a buy rating on Roblox stock with an $81 price target.
“Roblox’s faster growth, which should be driven by aging up and international expansion, high incremental margins, and growing profitability, justifies a premium multiple relative to videogame publishers, but a discount to pure gaming engines/platforms like Unity /zigman2/quotes/221035391/composite U -2.71% ,” Ng said.
Stifel Nicolaus analyst Drew Crum initiated coverage in mid-March with a bullish endorsement.
FactSet has tracked six analysts checking in on Roblox so far, with universal ratings the equivalent of “buy” and an average price target of $77.