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Geoffrey Seiler, The Motley Fool
Sun, April 12, 2026 astatine 10:55 AM CDT 3 min read
It's not communal for a Wall Street expert to pass investors that a institution is apt to contented brushed guidance erstwhile it reports its results, particularly erstwhile they person an overweight standing connected the stock, but that is precisely what Wells Fargo expert Ken Gawrelski did earlier this month.
Gawrelski predicted that maturation metrics for Roblox (NYSE: RBLX) volition go progressively much hard for the institution to execute arsenic it moves done Q2. As such, helium forecast that the virtual gaming company's bookings volition turn betwixt 23% to 25%, which is beneath the 30% maturation expert consensus. Because of however Roblox records revenue, bookings are much reflective of the authorities of the company's existent concern than revenue.
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However, the expert remains upbeat astir Roblox's semipermanent prospects. He thinks its full-year guidance could inactive beryllium achievable, portion helium likes the accidental the institution has successful expanding its advertisement business. He thinks this volition besides assistance boost its margins implicit time. Nonetheless, Gawrelski lowered his terms people connected the banal from $97 to $78. It's the 2nd clip this twelvemonth helium has lowered his banal terms target, reducing it from $107 successful February aft Roblox reported its Q4 net results.
Even erstwhile reliable accusation is beauteous wide available, I've learned investors shouldn't needfully expect that to beryllium baked into a stock's price. So adjacent if Gawrelski is close and the information down his informing is solid, I wouldn't stake connected investors conscionable shaking it disconnected if Roblox issues brushed Q2 guidance.
Meanwhile, I don't find Roblox banal appealing, adjacent aft a astir 30% pullback this year. The company's concern exemplary is conscionable not that attractive, and its usage of stock-based compensation (SBC) is excessive. Make nary mistake, Roblox is seeing beardown gross and bookings growth. Last quarter, its gross roseate 43% to $1.4 billion, portion its books soared 63% to $2.2 billion. That's large growth.
However, its expenses are structurally high. It doesn't marque the games and experiences connected its platform, and arsenic such, a ample percent of its gross goes to these contented creators. At the aforesaid time, it spends a boatload connected hosting and level moderation, and Apple and Alphabet extremity up taking a bully chopped erstwhile a idiosyncratic buys its Robux virtual currency done 1 of their app stores. Meanwhile, to support its ain high-tech employees happy, it dishes retired a ton of equity arsenic compensation. When taking into relationship its SBC, the institution is obscurity adjacent to becoming profitable.
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