Jefferies downgraded Roblox to Underperform from Hold and maintained its $38 price target, implying 18% downside from current levels. Shares fell 6% after the downgrade, following a 30% rally since the company’s second-quarter results. Analyst James Heaney supports Roblox’s expansion into new game genres and adult users but expects U.S. and Canadian user and bookings growth to improve more slowly and require greater investment than investors anticipate. Jefferies forecasts fiscal 2027 bookings growth of 5%, below Wall Street’s 13% estimate, and cut its own fiscal 2027 bookings estimate by 6% and EBITDA estimate by 21%. The brokerage attributed the rise in daily active users from about 20 million in early 2025 to a third-quarter peak of 26 million largely to viral games including Grow a Garden and Steal a Brainrot, which lost players quickly. Jefferies expects Roblox’s revised recommendation algorithm, which prioritizes long-term retention, to constrain user growth in coming quarters. Roblox’s second-quarter bookings rose 8% to $1.57 billion, while third-quarter guidance implied a 14% to 18% sequential contraction. Morgan Stanley remains Overweight with a $55 target, and FactSet’s 32-analyst consensus is Overweight with a $49.34 target.