Roblox (RBLX +1.11%) stock would have been a terrific buy in late 2022 when it was trading at a depressed valuation. Over the last one- and three-year periods, the stock has returned 77% and 172%, respectively, outperforming the S&P 500's gains of 13% and 67%.
Still, investors who bought shares five years ago would have seen only a 35% gain, significantly trailing the S&P 500's 75% gain over the same period. However, the key takeaway here is that nothing has changed Roblox's long-term growth trajectory; only investor sentiment has changed.
The most important question for investors today is whether the stock still offers upside from these elevated share prices.
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Roblox is stronger today than five years ago
Roblox has continued to improve its ability to attract users and generate revenue. Daily active users, hours spent on the platform, and bookings (non-GAAP revenue) accelerated in each quarter during 2025. Bookings increased by an impressive 70% year over year in the third quarter.
Most importantly, this growth shows that Roblox is expanding at a significantly faster rate than the broader video game industry, which is currently growing at a low single-digit rate. The company's trailing-12-month revenue of $4.4 billion is a small fraction of annual consumer spending on games, providing a long runway for growth on the platform.
Over the last few years, management has made investments to expand the amount of content on the platform, attract older players, and create the conditions for more viral hits that can expand its revenue potential. The strategy worked, as daily users have more than doubled over the last two years, and these users are also spending more time on the platform. In the previous quarter, time spent on the platform jumped 91% year over year to 39.6 billion hours.
NYSE: RBLX
Key Data Points
Focus on the business, not the stock
Investor sentiment can significantly impact a stock's performance from one year to the next; however, the best course of action for long-term shareholders is usually to remain patient and focus on the business' performance. Those who took advantage of the 2022 sell-off could have used the opportunity to buy more shares, lower their cost basis in the stock, and realize market-beating gains over the last few years.
Roblox is tapping into the crossroads of artificial intelligence (AI)-generated content and immersive communication. There are numerous opportunities for growth in advertising and new forms of content beyond games. Management aims to reach 1 billion users over the long term, and its recent growth indicates that the business is continuing to move toward that target. If you can hold shares for at least 10 years, there's enough opportunity here to earn market-beating returns.
