Roblox slips after getting a rare downgrade — but the game isn’t over yet
Raymond James says hype around Roblox’s hit game “Grow a Garden” is starting to outpace reality.
Roblox shares slipped nearly 5% Wednesday afternoon after Raymond James issued a rare downgrade on the stock, tapping the brakes following a massive rally in recent months.
To be fair, the firm only lowered its rating from “strong buy” to “outperform,” and still hiked its price target to $130 from $81. Still, the rating change is a sign that while growth is still strong, expectations may be running a bit hot. The stock has climbed 185% over the past year, including a 67% gain since the day after its strong Q1 report, fueled in large part by the breakout success of “Grow a Garden.”
Raymond James said the game has clearly driven a spike in user growth, but warned that investor excitement may be outpacing fundamentals. Still, the firm noted that platform-wide engagement remains strong even when excluding top-performing games.
The downgrade comes after a series of other bullish calls this week. On Tuesday, BMO Capital Markets raised its price target on Roblox from $95 to $135 and reiterated an “outperform” rating. Citigroup also boosted its target from $100 to $123, keeping a “buy” rating.
Even after today’s dip, Roblox shares are still up 97% year to date.
