Why Bank of America sees 13% upside on Roblox (RBLX)

Bank of America reiterated its "buy" rating on Roblox (RBLX), raising its price target to $103 from $86, reflecting a 13% upside based on the previous day's close, citing the company's leadership in the metaverse and strong Q1 2025 results. Roblox's Q1 showed a 29% revenue increase, a 31% increase in bookings, and a 26% increase in daily active users, driving optimism for sustained growth and attracting long-term investors. BofA anticipates continued growth driven by increased metaverse adoption, attracting developers, merchants, and brands, and the company's focus on metaverse innovation.

Analysis

Bank of America has reiterated its "buy" rating for Roblox (RBLX) and significantly increased its price target to $103 from $86, implying a 13% potential upside from the stock's previous close, driven by the company's robust growth and leadership position in the burgeoning metaverse sector. This optimism is underpinned by Roblox's strong Q1 2025 financial performance, which saw revenue surge by 29% year-over-year, bookings climb 31%, average daily active users increase by 26%, and platform engagement hours grow by 30%, alongside an adjusted earnings per share of -$0.32 that surpassed Wall Street expectations. The company's stock has already reflected this positive momentum, gaining over 54% in 2025. BofA analyst Omar Dessouky projects a sustained mid-20% growth trajectory for Roblox, fueled by increasing metaverse adoption creating a virtuous cycle attracting developers and brands, and highlighted RBLX as the "Metaverse category leader" unburdened by legacy media businesses, allowing full resource allocation to product leadership. Roblox is actively diversifying its revenue streams beyond virtual item transactions, notably through a partnership with Google for "Rewarded Video Ads," and is successfully broadening its user base, with 64% of Q1 2025 engagement hours now coming from users aged 13 and older, a significant increase from the previous year. Further commercial expansion is evident through initiatives like enabling creators to sell physical merchandise via a Shopify collaboration. The company also completed its reincorporation to Delaware from Nevada, effective May 30, 2025, a move which the article states aligns the company’s corporate governance with Nevada state rules.

Key Decisions for Investors

• Investors should consider the strong growth metrics and Bank of America's upgraded target for Roblox, while also acknowledging the stock's substantial 54% year-to-date appreciation when assessing new or additional positions.
• It is prudent to closely monitor Roblox's execution on its monetization diversification, particularly the success of new advertising initiatives and e-commerce integrations, alongside continued user growth and engagement, especially within the 13+ demographic.
• Future performance will likely depend on Roblox's ability to maintain its innovation pace and leadership in the metaverse, which are key to achieving the projected mid-20% growth runway and attracting further investment.