Youth-centric gaming and social platform Roblox has earned positive notices from Wall Street analysts for its new advertising initiative. Roblox stock rose on Wednesday.
On Tuesday, Roblox launched a new form of advertising called Rewarded Video Ads. The feature allows users to watch ads in exchange for an in-game benefit.
Roblox has partnered with Alphabet unit Google to scale the new ad format and offer it to brands and agencies.
Plus, Roblox announced partnerships with Cint, DoubleVerify, Integral Ad Science, Kantar and Nielsen to help ad buyers effectively measure the impact of their ads.
With Rewarded Video Ads, users can opt in and watch up to 30-second full-screen video ads within Roblox games and experiences. In return, users get in-game benefits from the game creators, such as power-ups and in-game currency.
"This new format is a win-win-win for brands, creators, and users, and we've been excited by the early results of our tests which have proven this out," Stephanie Latham, vice president of global brand partnerships and advertising at Roblox, said in a press release.
She added, "Our partnership with Google makes it very easy to buy these engaging ads and reach key audiences at scale. We are continuing to remove barriers for brands and agencies that are quickly realizing the massive potential of immersive gaming platforms like Roblox where Gen Z are increasingly spending their time."
Roblox Stock Climbs On News
On the stock market today, Roblox stock advanced 1% to close at 61.61. On Tuesday, Roblox stock jumped 4.6%.
Roblox offers a 3D virtual space in which people can socialize and play games. Roblox online experiences range from gaming and hangouts to concerts, sports, fashion shows, education and entertainment.
Morgan Stanley analyst Matthew Cost reiterated his overweight, or buy, rating on Roblox stock with a price target of 75.
"We are fundamentally bullish on the ad opportunity at Roblox, as we see the potential to significantly increase monetization of its 85 million DAUs (daily active users)," he said. Cost estimated the potential revenue opportunity for Roblox at $1.2 billion in 2026.
Rewarded Video is in addition to the billboard and portal ad units that Roblox launched last year, he said. "Looking further ahead, the company noted that it continues to work on new initiatives including homepage takeover ads, deeper e-commerce integrations, and more engaging sponsored experience ads," Cost said.
Deutsche Bank analyst Benjamin Black maintained his buy rating on Roblox stock with a price target of 78.
"We view this launch as a meaningful new monetization lever for Roblox, which by our calculations could drive $150 million to $300 million in additional advertising revenue in 2026," he said. Roblox will share the ad revenue with Google and the game creators.
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