Popular games highlight growth potential, HSBC raises target price for Roblox (RBLX.US) to $115.

HSBC released a research report stating that Roblox (RBLX.US)'s new hit game "Grow a Garden" reflects the company's increasing success in providing fresh game content. HSBC maintained a "buy" rating on Roblox, raising the target price from $91 to $115. HSBC pointed out that Roblox's newly released simulation game "Grow a Garden" has shocked the gaming industry. The game ranked first on the Roblox leaderboard, and online players reached a record-breaking 21 million. Third-party data shows that the game is strongly driving the increase in user engagement. HSBC believes that the success of "Grow a Garden" reflects Roblox's growing strength in organic content acquisition and development. This organic and low-cost approach to new game development is at the core of the Roblox model, and explains the frequent emergence of new hits on the platform - a stark contrast to the reliance on old games and high-budget productions in the console and mobile gaming industry. The bank expects Roblox to further expand its lead in the frequency of hit content releases, benefiting from investments in its AI content discovery engine, platform updates to support more game types, and the expected increase in developer revenue due to recent regulatory changes. Due to the success of "Grow a Garden", HSBC has raised its bookings forecast for Roblox for the 2025/26 fiscal year by 2%, and raised its diluted earnings per share forecast for the 2025/26 fiscal year by 11%. HSBC stated that, given Roblox's leadership position in the online gaming sector, its unique advantage targeting a young audience, and the potential for revenue and profit growth driven by improving economic conditions, expanding market potential, and expanding advertising business, the bank maintains its "buy" rating on the company with a target price of $115. The bank has adjusted its EBITDA forecast for Roblox's 2029 fiscal year to $3.233 billion (up from $3.08 billion), and increased its valuation multiple from 29 times to 35 times. The bank added that the new target price implies about an 11% upside, with risks including the difficulty of competing for market share in the competitive digital advertising market and challenges in platform regulation for the teenage user group.