Here's Why Benchmark Initiates Roblox Stock As A Sell

While the pandemic accelerated awareness and adoption of Roblox Corp.’s RBLX online game platform, the company could face challenges ahead, according to Benchmark.

The Roblox Analyst: Mike Hickey initiated coverage of Roblox with a Sell rating and a price target of $75.

The Roblox Thesis: The company’s metaverse platform could lose steam with the easing of social restrictions, reopening of schools and a reallocation of parental spend, Hickey said in the initiation note.

“Growth initiatives include platform extensions, expand player age, international reach and monetization. We are cautious over growth initiatives that extend beyond core game play. We think RBLX appeals to children. Most will age out and some may embellish on their age, which can skew the average,” the analyst wrote.

“We are cautious the pandemic pulled forward growth, and normalized behavior may dampen outlier engagement trends,” Hickey said.

“We believe most children do not personally pay for their RBLX game experience, and because parents are not directly investing in the service, are less emotionally connected and can easily throttle back spend post-pandemic,” he added.

RBLX Price Action: Shares of Roblox had declined by 3.42% to $83.56 at the time of publication Tuesday.