Roblox stock fell Tuesday after a dizzying 74% climb over the past two months.
On Monday, shares of the kid-focused video game service spiked to a more than three-year high of 127.99 before pulling back. Roblox stock ended Monday unchanged from the previous session at 124.50. That ended a six-day streak of gains.
BMO Capital Markets analyst Brian Pitz on Tuesday reiterated his outperform rating on Roblox stock and raised his price target to 135 from 95.
Roblox is benefiting from hit game "Grow a Garden," Pitz said. That gardening simulation game set a record for concurrent users on Saturday, he said. That's when 21.9 million users were playing the game at the same time, he said.
Other games doing well on the Roblox platform include "99 Nights in the Forest" and "Steal a Brainrot," he said.
However, not everyone on Wall Street is sold on Roblox.
TD Cowen analyst Doug Creutz rates Roblox stock as sell with a price target of 54.
On the stock market today, Roblox stock declined 3.5% to close at 120.20.
Roblox Stock Is A Recent Breakout
"Roblox has successfully built itself into a prime online entertainment destination for children and young adults," Creutz said in a report last week. "However, current valuation appears to rely on the company continuing to see accelerated growth based on hopes of it being a major player in the emerging metaverse."
But the actual metaverse is still at least 10 years away and competition in that space will be intense, he said.
"Ultimately, we believe the company should be valued more along the lines of a traditional entertainment platform company," Creutz said.
On May 12, Roblox stock broke out of a cup-with-handle base at a buy point of 74.24, according to IBD MarketSurge charts. It reached the 20%-to-25% profit-taking zone on June 2, based on IBD trading guidelines.
Roblox stock is on the IBD 50 list.
Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
