Youth-centric video game platform Roblox surged in the second quarter thanks to hit online game "Grow a Garden." Now Roblox stock is rising anew on reports of another hit game, "99 Nights in the Forest."
On the stock market today, Roblox stock jumped 4% to close at 107.76. Earlier in the session, shares reached a more than three-year high of 107.99.
BMO Capital Markets analyst Brian Pitz said "99 Nights in the Forest" has experienced "an impressive ramp" in users recently.
Released in March, the survival horror game has rapidly ascended the "top trending" charts on Roblox, Pitz said in a client note late Thursday. To date, "99 Nights in the Forest" has achieved more than 200 million visits.
"The game features monetization methods and is currently on the 'top earning' chart, having also ranked among the top five games for concurrent users over the past week," Pitz said.
He added, "This game is further proof that games can achieve meaningful scale on Roblox, and we believe it demonstrates the execution that Roblox has driven in search and discovery."
Pitz rates Roblox stock as outperform, or buy, with a price target of 95.
Roblox Stock Is On Two IBD Lists
"We expect to see more breakout games on Roblox as a flywheel effect takes place, where more players drive more developers to create higher-quality games, which in turn attract more players to the platform, thereby incentivizing additional developers to create games on the scaled platform," he said.
Meanwhile, the continued success of "Grow a Garden" has sparked interest among advertisers to advertise on Roblox, Pitz said. However, that game currently does not have ads.
"We believe Grow a Garden's massive scale would make it an attractive platform for advertisers to scale their campaigns, and that it could help prove the effectiveness of advertising on Roblox for advertisers," Pitz said.
Roblox stock ranks second out of 23 stocks in IBD's Computer Software-Gaming industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 90 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
Further, Roblox stock is on two IBD lists: IBD 50 and Tech Leaders.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
