Gaming platform developer Roblox (RBLX 0.59%) has been one of the best-performing technology stocks of 2025. Shares have gained 107% year to date and now command a market cap of more than $80 billion.
Roblox has been making excellent progress in its business, but is it still a good time to buy? Is there enough growth potential left in the business to justify a valuation of more than 21 times sales? Here's an overview of why Roblox has been such a strong performer and what could help take the company -- and the stock -- to the next level.
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Why has Roblox stock performed so well?
First and foremost, Roblox reported surprisingly strong first-quarter earnings. The company reported a 31% year-over-year increase in bookings, and as I'll discuss in the next section, user growth was extraordinary. Plus, the company's path to profitability is becoming much clearer, with a swing to positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), compared to a $31 million loss a year ago.
There have been some other exciting developments as well. In mid-July, Roblox announced the launch of a new licensing platform, enabling content creators and intellectual property (IP) holders to collaborate. Initial partners include Netflix and Lionsgate, so this could end up being a big revenue driver.
In addition, several analysts have issued bullish calls on Roblox in recent months. To be sure, I'll never buy a stock solely because of an analyst upgrade, but this is certainly helping provide upward momentum here.
Does Roblox still have room to grow?
In the first quarter, Roblox reported stellar 26% year-over-year growth in its user base, which was a significant acceleration from the 19% growth rate reported in the prior quarter. The platform now has 97.8 million daily active users (DAU), with more than 20 million making purchases at least monthly.
For one thing, Roblox has stated that its long-term vision is to scale to 1 billion users (roughly one-third of the global video gaming population). Plus, the number of paying users is growing at a faster pace (29% year over year in Q1) than the overall user base, indicating that Roblox and its partners are doing a solid job of creating content that people are eager to pay for.
Recently, Roblox Chief Product Officer Manuel Bronstein said that the company's goal is to have "10% of all gaming content revenue flowing through the Roblox ecosystem." The global video gaming market is estimated to be $299 billion in size today and is expected to double by 2030. If Roblox achieves this target, it would more than 10x its revenue.
Not only that, but Roblox is an early mover in the metaverse, which goes beyond just gaming. And the global metaverse market itself is expected to grow to more than 10 times its current size by 2032.
The short answer is yes. Although Roblox is a massive platform that has grown impressively so far, there could still be plenty of room to run.
The bottom line on Roblox
Earlier this year, I wrote that I believed Roblox could double its then-current market cap to $82 billion within three years. Thanks to strong business momentum, it has already reached that. And if management can continue to execute on the growth strategy, there could still be a lot of upside potential ahead. I own Roblox in my portfolio and don't plan to sell a single share.
