Morgan Stanley: Downgrades Metaverse Concept Roblox from Underweight to Reduce

01/20 11:26

Analysts at Morgan Stanley recently issued a research note downgrading metaverse concept Roblox (NYSE:RBLX) from an underweight rating to a hold rating and lowering their price target to $24 from $27.50, citing slowing growth in the second half of the year and little upside for advertising in the near term. Analysts highlighted that Roblox's stronger-than-expected user activity report last December boosted shares by 28% year-to-date, and that rise means expectations that growth can be expected to re-accelerate in the first half of 2023 have now been fully absorbed. Morgan Stanley said it is now only looking at a mixed outlook for the company, noting that competition will materially become more intense from May 2023 and we expect a significant year-on-year slowdown from the third quarter of 2023. The analysts refer to the advertising revenue outlook, noting that while the market remains focused on advertising as a key growth driver ...... but we expect a slow boost in the short term and limited financial impact. Combining these factors, Morgan Stanley believes the risk-reward ratio for Roblox stock has turned negative.

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