Why Roblox's Q1 Has BofA Analyst Optimistic For Long-Term Prospects, Despite Investor Sentiment Split About Growth

BofA Securities analyst Omar Dessouky shared views on Roblox Corporation RBLX ahead of its first quarter FY25 earnings release on May 1.

The analyst maintained a Buy rating on the company with a price forecast of $79.

The analyst anticipates the company to gain market share in the video game sector due to its virtually unlimited pool of developers and its ability to drive innovation beyond the broader gaming industry.

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Roblox remains under-owned, but that may shift as more investors seek companies with durable growth prospects, especially those less exposed to tariffs or consumer spending fluctuations in the latter half of 2025, adds the analyst.

Dessouky says investor sentiment around first-quarter growth appears split; some anticipate year-over-year growth above 30%, while others expect a more modest 23%, in line with guidance.

The analyst says that management’s reminder of the challenging third-quarter bookings comparison led investors they spoke with to expect a significant slowdown in the core business (excluding ads) in the second half of 2025, with growth potentially falling well below 20% year-over-year.

Dessouky writes that investor expectations for advertising revenue remain low, at around $150 million, despite the integration of Google Ad Manager with Roblox.

The analyst says that they expect management to confirm that strong performance from December and January continued into February, with a slight slowdown in March due to the timing of Easter.

Additionally, cash flow metrics for the quarter may surpass expectations, supported by collections from December bookings, adds the analyst.

Meanwhile, the analyst adds that several initiatives, such as regional pricing and price optimization, could drive stronger-than-expected performance in the second half.

RBLX Price Action: Roblox shares are down 1.49% at $58.82 at publication on Monday.

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