Roblox robust engagement tempered by greater investments, says Canaccord

Canaccord notes that Roblox (RBLX) reported strong Q3 results. Numerous AI-powered search and discovery improvements have supported several new viral hits over recent months, and strategic investments in creating a more vibrant economy and improved app performance have led to accelerating engagement and monetization in international markets. The company’s Q4 guidance was ahead of expectations, although shares of Roblox fell sharply given somewhat cautious commentary regarding next year, Canaccord says. The company is planning to ramp its infrastructure investments to support heightened engagement levels and ongoing product innovation aimed at genre diversification, and these investments, along with higher DevEx rates, may result in a slight year-over-year decline in Roblox’s operating margin next year depending on the level of bookings growth. The firm has a Buy rating on the name with a price target of $160 on the shares.