Roblox (NYSE:RBLX) has demonstrated success in its interactive content platform, achieving record-high daily active users and a 30% year-over-year revenue growth in the fourth quarter of 2023. Despite this success, skepticism remains regarding the company’s ability to sustain growth and effectively monetize its free-to-use platform.
However, JPMorgan analyst Cory Carpenter views this skepticism as an opportunity and has upgraded Roblox stock from neutral to overweight. Additionally, Carpenter has raised the price target from $41 to $48, indicating a potential 33% upside from the current share price.

Roblox’s recent growth streak has been met with hesitation from the market due to concerns about its reliance on the gaming sector and its inconsistent operating history. However, Carpenter believes that Roblox possesses significant growth opportunities, particularly in developing new revenue streams such as advertising.
Moreover, Carpenter notes that Roblox is concluding a period of heavy spending, which is expected to lead to robust bottom-line growth. Management’s target of margin expansion by one to three percentage points through 2027 further supports this optimism.

Over the past two years, Roblox has maintained a price-to-sales ratio of around 8. If the company successfully executes its growth plans, achieving top-line growth of 20% or higher through 2027 as projected by management, the stock could reach Carpenter’s target price.

In summary, Carpenter’s bullish outlook on Roblox reflects confidence in the company’s ability to capitalize on growth opportunities and generate strong financial performance in the coming years.