The "Grow a Garden" Boom: Is Roblox Stock Unstoppable?

Key Points

• Grow a Garden has been a huge hit on Roblox's gaming platform, with millions of people playing it every day.

• The stock has more than doubled this year, thanks in large part to Grow a Garden's success.

• Despite Roblox's impressive growth, however, the company is still nowhere near turning a profit.

• 10 stocks we like better than Roblox ›

Grow a Garden may not sound like the most exciting game to play on Roblox (NYSE: RBLX), but it's definitely the most popular. Last month, it reached a record of more than 22 million people playing it simultaneously. That blew past Fortnite's previous record of more than 15 million concurrent users.

For Roblox, that's great news for business. More gaming means more purchases of its virtual currency, Robux. That leads to more sales growth and it can help the business attract more advertisers, which is one of the more intriguing long-term growth opportunities for Roblox's business.

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The excitement around Grow a Garden has already helped Roblox's stock more than double this year. Since January, it's up around 120% as of the end of last week. Could there still be even more gains to come, or is it too late to invest in Roblox?

Image source: Getty Images.

Why Roblox stock could continue rallying

Grow a Garden is about as interesting and exciting of a game as it sounds, centering around growing a garden. But it has, nonetheless, captivated millions of users around the world. And users can pay for premium seeds and other things to enhance their gardens, which is where purchases of Robux come into play.

How long the excitement around Grow a Garden will last is debatable, with some comparing it to Farmville, which was popular on Meta Platforms' Facebook platform over a decade ago. And even years after the initial hype, millions of people continued to play Farmville. It was, however, eventually discontinued in 2020.

Roblox may benefit from Grow a Garden's hype for years. But with tens of millions of user-created games on its platform, there's always the potential for a new game to be the next big thing on Roblox. While the graphics may not be flashy or exciting like they may be on consoles, it's becoming evident that it's the user experience and connectivity with friends that matters most to young gamers, and that's where Roblox shines, and why it can continue to do well long after the Grow a Garden boom ends.

Roblox still faces significant challenges

As much as I see the potential in Roblox's growth, there's still the lingering concern about its lack of profitability. Through the first six months of this year, the company has generated $2.1 billion in revenue -- an increase of around 25% from the same period last year. But despite this terrific growth, the company's operating loss increased as well, from $540 million to $577 million.

Although the business's growth looks promising, investors shouldn't overlook the risks related to Roblox's financials. Without a stronger bottom line, it may be difficult for the gaming stock to continue rising a whole lot higher. Revenue growth alone can only take a stock so high before expectations rise and investors demand more.

Roblox's stock recently hit a new all-time high, beating the levels it reached back in 2021. But then, it fell from those highs, which may suggest that there is resistance at such a high valuation. Today, the stock trades at around 21 times its trailing revenue.

Why the stock can still be a good long-term buy

Roblox is an expensive stock to buy right now. But one of the reasons I'm still bullish on it is that it's only scratching the surface with respect to advertising. Earlier this year, it launched video ads that reward users for watching them with in-game benefits. If its ad business can create more growth for Roblox, that can help improve its overall margins and possibly pave a way to profitability in the future.

Grow a Garden is giving Roblox a boost today, but it's by no means the only popular game on the platform. Roblox has loads of potential to become even bigger and hopefully profitable in the future, which is why it can still be a good investment to hold on to for the long run, despite its already incredible performance thus far in 2025.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Roblox. The Motley Fool has a disclosure policy.