The firm cut the stock to underperform with a $38 target, about 18% below Friday's close, on doubts about how fast older users and new genres will pay off in North America.
Roblox's plan to grow up with its users has a skeptic.
Jefferies analyst James Heaney downgraded the gaming platform to underperform from hold on Monday, with a $38 price target, about 18% below Friday's closing price. The call rests on Roblox's two biggest growth initiatives in its most valuable markets: expanding into new game genres and attracting users 18 and older in the U.S. and Canada.
"While we are positive on RBLX's focus on expanding its platform to support new genres and the 18+ age demo, we believe the improvement in US & Canada user and Bookings growth will be longer and more costly than the market expects," Heaney wrote.
Roblox shares fell about 4.7% to $44.26 in afternoon trading.
The bookings gap
Jefferies models bookings growth of about 5% for fiscal 2027, against a Wall Street average of about 13%. Bookings, a measure of spending on the platform, are the figure investors use most to track Roblox's growth.
Heaney said he has yet to see Roblox's new recommendation algorithm drive the genre and older-user expansion the company is counting on. Until it does, he argued, it is hard to judge whether U.S. and Canada users can return to their peak of more than 25 million.
Two readings
The bullish case is that Roblox is still early in reaching older users and new genres, and that the investment spending Jefferies flags is the cost of a larger platform. The bearish case, the one Jefferies is making, is that the payoff will arrive later and at a higher cost than current forecasts assume, which would pressure both growth and margins.
Roblox's third-quarter results will be the first check. Daily active users in the U.S. and Canada and bookings growth against that 13% average will show which timeline is closer.