Can RBLX's Discovery Engine Power the Next Engagement Wave?

Roblox Corporation RBLX underscored the effectiveness of its discovery engine in the second quarter of 2025, framing it as a central driver of record engagement levels. The platform reached 111.8 million daily active users, a 41% increase year over year, and logged 27.4 billion engagement hours, up 58% from the prior year. While viral hits such as Grow a Garden drew headlines with more than 20 million concurrent players, management highlighted the importance of the discovery system in sustaining broad-based momentum across the ecosystem.

The discovery system has been instrumental in driving cross-experience engagement. Over 75% of Grow a Garden players engaged with at least one additional Roblox title on the same day, while more than half of the quarter’s spending growth came from experiences outside the top 10 rankings. This underscores the strength of the discovery engine to expand visibility and monetization opportunities.

Looking ahead, Roblox is refining discovery signals to provide greater transparency for developers. Management emphasized that recommendations are designed to maximize long-term user value rather than short-term surges, supporting a healthier ecosystem. Initiatives such as sponsored tiles and the newly launched Creator Rewards program are expected to enhance discoverability and broaden participation.

Alongside these improvements, the company is advancing its safety agenda. In July, Roblox rolled out RoGuard 1.0, an open-source toolkit to establish guardrails around large language models, and introduced new privacy and screen-time controls. These steps reflect the company’s broader commitment to maintaining trust while scaling engagement.

Roblox reiterated its long-term aspiration to capture 10% of the $180 billion global gaming content market. With discovery extending engagement beyond a few viral titles and enabling smaller developers to gain traction, management positioned it as a structural growth lever for the platform’s future.

RBLX Price Performance, Valuation & Estimates

Roblox shares have rallied 30.6% in the past three months compared with the industry’s rise of 12.8%. In the same time frame, other industry players like Boyd Gaming Corporation BYD, DraftKings Inc. DKNG and Monarch Casino & Resort, Inc. MCRI have gained 7%, 2.4% and 19.7%, respectively.

RBLX Three-Month Price Performance

RBLX stock is currently trading at a premium. It is currently trading at a forward 12-month price-to-sales (P/S) multiple of 12.89X, well above the industry average of 3.28X. Then again, other industry players, such as Boyd Gaming, DraftKings and Monarch Casino have P/S ratios of 1.85X, 3.04X and 3.33X, respectively.

The Zacks Consensus Estimate for Roblox’s 2025 loss per share has widened from $1.36 to $1.71 over the past 60 days. This downward revision indicates that analysts have grown more cautious on the company’s near-term earnings profile.

RBLX is likely to report dismal earnings, with projections indicating an 18.8% decline in 2025. Conversely, industry players like Boyd Gaming, DraftKings and Monarch Casino are likely to witness growth of 5.2%, 226.7% and 12.3%, respectively, year over year in 2025 earnings.

RBLX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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