Roblox (RBLX) Rated New Underperform at MoffettNathanson, Analyst Sees Almost 50% Downside Risk

October 3, 2022 8:48 AM EDT
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Price: $31.93 +3.77%

Rating Summary:
    11 Buy, 9 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 14 | Down: 24 | New: 39
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MoffettNathanson analyst Clay Griffin initiated research coverage on Roblox (NYSE: RBLX) with an Underperform rating and a $19 per share price target.

While the analyst acknowledges that Roblox built an “undeniably powerful interactive entertainment platform,” Griffin also notes that experiences are “lightweight and derivative of concepts already well-developed on other platforms.”

The analyst is also cautious about Roblox’s plans as the company “seems to want to pivot the narrative to a distant and, in our view, rose-colored, picture of the future.” All this while the market is “increasingly fraught about the here and now.”

On a more positive note, Griffin sees a “reasonably good” margin profile, but that’s not enough for him to get more constructive on Roblox shares.

“We’re just not sure Roblox’s reality will be as grand as its vision. In a market looking for less evangelism and more “meat on the bone,” there’s plenty of room for the market to lose confidence,” Griffin further wrote in an initiation note.

Griffin’s price target of $19 implies a downside risk of almost 50% compared to Friday’s closing price of $35.84.

Roblox shares are trading modestly lower in pre-open Monday.

By Senad Karaahmetovic

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