Why Roblox’s Recent Rally May Have Been ‘Overly Optimistic,’ According to Jefferies

Roblox (RBLX) shares came under pressure after Jefferies downgraded the stock to “Underperform” from “Hold,” arguing that the rally following the company’s second-quarter results had priced in an “overly optimistic” bookings outlook. Analyst James Heaney maintained a $38 price target, implying over 12% downside from RBLX stock’s Oct. 1 close, and said improvements in U.S. and Canadian users and bookings could take longer and cost more than investors expect.

Jefferies also expects Roblox’s platform changes to weigh on near-term growth. The firm projects just 5% fiscal 2027 bookings growth, compared with a 13% Wall Street consensus. The brokerage believes Roblox’s new recommendation algorithm, higher developer payouts, infrastructure spending, and investments tied to generative AI could create additional pressure on bookings and margins before the company’s longer-term initiatives begin to pay off.