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Roblox: Misunderstood Story (Rating Upgrade)

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Update - Jan. 30, 2026

Roblox plunged 13% to multi-month lows due to the Project Genie fears. Google having an interactive virtual world is far different from having a platform for user interaction The sell off is far over done. 

  • Video game stocks are plummeting in Friday's afternoon trading session after tech giant Google (GOOG) (GOOGL) announced "Project Genie," an experimental research prototype that allows users to create virtual worlds and interact with them.
  • Names like Unity Software (U) -21.6%, AppLovin (APP) -13.2%, Roblox (RBLX) -12.3%, and Take-Two (TTWO) -9% are getting hit the hardest.
  • "Consumers may be able to vibe code virtual worlds to explore, but there has to be a platform for online engagement, and there will still be a market for higher-quality experiences," the Wells Fargo added.
Ultimately, Project Genius has these major restrictions. Not to mention, the prototype requires a Google AI Ultra subscription costing $250/month. 


Update - Jan. 13, 2026

Roblox ended up 10% today after BMO reiterated a $155 PT on the expectations of strong bookings growth in 2026.

-The shares rebounded sharply after closing Monday at $76.72, trading around $83 midday on heavy volume of over 13 million shares, following support at $71-$75 and bullish patterns like cup-and-handle formations. Traders highlighted the momentum, with one joking about nailing the exact 10% move from an interesting chart last week. A key boost came from the new game 'Escape Tsunami for Brainrots!,' which hit top 5 by concurrent users over the weekend with 40 million-plus visits, drawing praise from BMO Capital for signaling strong bookings growth into 2026.

Finviz Chart

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Original article posted on Dec. 17

  • Roblox delivered explosive engagement and bookings growth, yet the stock has plunged nearly 50% from recent highs.
  • RBLX's GAAP losses obscure strong cash flow generation, as bookings surged 70% to $1.92 billion in Q3'25 and free cash flow is set to top $1.15 billion in 2025.
  • The market fears rising developer fees and margin compression due to how accounting requires the reporting of GAAP profits.
  • The stock is cheap now, trading at 7.5x '26 bookings, but Roblox is still looking for a bottom and could trade much lower.
Roblox Corporation (RBLX) recently reported a remarkable quarter and now the stock is collapsing. The stock market has a major ability to discount past growth while ignoring the mobile gaming platform that has years of growth ahead. My investment thesis is back to ultra-Bullish on the stock, especially after the nearly 50% dip following a blowout quarter.


Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaim page for more details. 

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