Read This Before Buying Roblox Stock

One of the top video game platforms in the world is Roblox (NYSE: RBLX). And for investors unfamiliar with the company, it's important to read this information before making an investment.

But first, a brief introduction: Roblox is a platform that contains millions of games and experiences. The platform was historically used by U.S. children. But in recent years, the base has expanded. In the third quarter of 2025, only 17% of Roblox's daily active users were based in the U.S. and Canada, and only 33% were under 13 years old.

Here are some things to know before investing in Roblox stock.

Image source: Getty Images.

The AI boost this business needed

With millions of things to choose from on its platform, how are Roblox's users supposed to find anything? To be sure, it's been a problem. But the company solved it with artificial intelligence (AI), and it's an instance where AI lives up to the hype.

The AI search algorithm better matches users to games and experiences. And the results have been head-turning. In Q3, Roblox had seven experiences with 10 million or more daily active users. Of these seven, five were created in the past year.

In other words, over 70% of the company's top seven experiences are brand new, but users were able to find them fast all the same, thanks to the AI recommendations.

This means Roblox's engagement is skyrocketing since its latest AI upgrades. In Q3, its user base grew 70% year over year to 151 million daily active users. And the platform hit nearly 40 billion hours of time spent by its users, up 91%.

Roblox's management says that it believes its platform can support 1 billion users, implying a nearly seven times larger business than it is today. And at this rate of growth, this is quickly looking more and more attainable.

What to watch now

As of this writing, Roblox's stock price has dropped 35% from recent highs, and there's some justification for this. The price-to-sales (P/S) valuation for Roblox stock had more than doubled in 2025, spiking above 20. It makes sense that it came back down some.

Data by YCharts.

That said, Roblox's current P/S ratio of 14 is expensive, but not outrageous for a business growing at this speed. If the company can truly reach its potential for 1 billion users in the coming years, its current valuation will look attractive in hindsight.

As Roblox grows, it's important for the business to scale profitably and without diluting shareholders. Right now, the company still pays its employees with a liberal amount of stock-based compensation, which leads to net losses and dilutes shareholders.

If Roblox's management can get this under control as it continues to grow, this stock could be one of the stronger performers on the market.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox. The Motley Fool has a disclosure policy.