Why Roblox Stock Skyrocketed Today: Breaking Down the Metaverse Surge

Roblox shares just ripped through the roof—here's what's fueling the explosive rally.

Earnings Blowout

The platform smashed analyst expectations, posting record user engagement that sent institutional investors scrambling for position. Daily active users hit unprecedented levels while average revenue per user climbed double-digits.

Metaverse Momentum

Speculation around virtual real estate and digital asset trading ignited retail frenzy. Developers launched high-profile experiences, pulling in both younger demographics and surprisingly older cohorts diving into the creator economy.

Wall Street Whiplash

Analysts scrambled to upgrade price targets—some now calling it the 'gateway drug to the metaverse.' Short sellers got crushed as momentum traders piled in, because nothing fuels a rally like a good old-fashioned short squeeze. Typical finance folks—always late to the digital party.

Bottom line: Roblox isn't just playing games—it's rewriting the rules of digital engagement while traditional finance still tries to figure out what an NFT is.

Image source: Getty Images.

What Wedbush says about Roblox

Roblox is under fire from the Louisiana Attorney General's office for alleged "facilitat[ion of] the distribution of child sexual abuse material and the sexual exploitation of Louisiana's children." But Reese says that "notwithstanding a slew of recent and forthcoming hit pieces and legal action," Roblox stock is still a winner and "the most compelling" growth stock in the entire video game sector.

Addressing the litigation risk, Reese commends Roblox for moving quickly to protect its children-users online. Meanwhile, the company's Grow a Garden and Steal a Brainrot games "continue to drive significant engagement" among these users.

Is Roblox stock a buy?

Roblox is sticking with its forecast for 41% to 45% bookings growth in Q3, a metric that should translate into revenue and profits growth over time.

But that's just the issue: Roblox doesn't actually have any profits at present. It's lost money every year it's been in business, and analyst forecasts have Roblox continuing to lose money through 2029, if not longer. Although free cash FLOW positive, the stock still sells for an elevated 86.5 price-to-free cash flow ratio.

Even on a "41% to 45%" bookings/revenue/profit growth rate, that seems too expensive -- and until this changes, Roblox stock remains a sell for me.