Jefferies cuts Roblox to Underperform, says rally is too optimistic

Investing.com -- Jefferies downgraded Roblox to Underperform from Hold in a note on Monday, telling investors that the stock's 30% rally since second-quarter results reflects overly optimistic expectations for bookings over the next 12 months.

The firm kept its $38 price target, implying 18% downside.

Analyst James Heaney said he supports Roblox's push into new game genres and adult users, but "we believe the improvement in US & Canada user and Bookings growth will be longer and more costly than the market expects."

Daily active users in the U.S. and Canada rose from about 20 million in early 2025 to a peak of 26 million in the third quarter of 2025.

Jefferies said that growth came mostly from viral hits such as Grow a Garden and Steal a Brainrot, which lost players quickly. Roblox's new algorithm favors games that keep players over the long term, which the firm expects will limit user growth in the next few quarters.

Jefferies forecasts 5% bookings growth in fiscal 2027, well below the Wall Street estimate of 13%. It cut its fiscal 2027 bookings estimate by 6% and its EBITDA estimate by 21%.

"One of our key concerns is that Roblox will need to sustain elevated investment levels despite slowing bookings growth," Heaney wrote.

He compared Roblox with Meta in 2017 to 2019, when higher spending squeezed margins as revenue growth slowed.

“RBLX is similarly in investment mode as it 1) increases payouts by 42% for U.S. in-game spend from players aged 18+, 2) increases infrastructure spending to support Gen AI adoption and model training, and 3) diversifies beyond the core platform (e.g. Roblox Everywhere). As a result, we do not model EBITDA margin expansion until FY28,” added Heaney.

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