Roblox (RBLX) Shares Skyrocket, What You Need To Know

What Happened?

Shares of gaming metaverse operator Roblox (NYSE:RBLX) jumped 5.9% in the afternoon session after an analyst upgrade from JPMorgan, which raised its price target on the stock. 

JPMorgan analyst Cory Carpenter lifted the firm's price target on Roblox to $125 from $120, maintaining an "Overweight" rating on the shares. The move signals growing confidence in the online gaming platform's momentum, fueled by record-breaking user activity. The analyst pointed to surging engagement levels as a key driver, noting that concurrent users hit an all-time high of 32 million. In light of this accelerating growth, JPMorgan now anticipates Roblox's bookings—a key metric representing virtual currency purchased by users—to climb 37% in the second quarter, outpacing the company's own forecasts. The positive sentiment was also bolstered by Roblox's recent announcement of a new tool allowing developers to license iconic characters from franchises like "Stranger Things" and "Squid Game" for use within the platform's experiences.

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What Is The Market Telling Us

Roblox’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock gained 5.3% after a Bloomberg report highlighted the lucrative potential for game developers on its platform, with some creators selling their games for seven- and eight-figure sums. 

The report detailed how the platform's growth, which is approaching 100 million daily active users, is turning some teen developers into millionaires. For instance, the game 'Blue Lock: Rivals' was reportedly sold for over $3 million after generating $5 million a month in purchases. This thriving creator economy is the lifeblood of Roblox's business model. When developers create popular games, it attracts more users to the platform and drives spending on in-game items and experiences, from which Roblox takes a share. Positive stories about creator success can incentivize more developers to build on the platform, creating a virtuous cycle of content creation and user growth that boosts investor confidence.

Roblox is up 103% since the beginning of the year, and at $119.29 per share, has set a new 52-week high. Investors who bought $1,000 worth of Roblox’s shares at the IPO in March 2021 would now be looking at an investment worth $1,716.

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