Roblox stock fell Monday after shares of the videogame company were downgraded as Wall Street believes the 30% rally since second-quarter earnings were released represents an overly optimistic view from investors.

Roblox stock declined 3.5% to $44.80 in premarket trading on Monday after ending Friday down 4.9%. Shares have declined 43% this year but have risen 30% the company reported second-quarter earnings after the closing bell on July 30.

The recent rally might be the wrong take on the business trajectory, according to Jefferies.

The firm downgraded Roblox to Underperform, the equivalent of a Sell recommendation, from Hold but kept its price target of $38 unchanged. That price target represented 18% downside from the closing price of $46.44 on Friday.

Jefferies noted that the share price gain since the company reported second-quarter earnings reflects an "overly optimistic view" of Roblox's 12-month bookings trajectory. The firm, however, was upbeat about the videogame company's plans to expand its platform to support new game genres.

But Jefferies believes Roblox's improvements with users and bookings growth in the U.S. and Canada will be longer and more costly than the stock market expects.

Total bookings, the key metric for the company, increased 8% to $1.57 billion in the second quarter but came in at the lower end of the company's guidance range of $1.55 billion to $1.61 billion. Roblox has forecast third-quarter bookings at $1.58 billion to $1.65 billion, which would represent a decline of 14% to 18%.

Barron's made Roblox a stock pick on Nov. 25, 2025. Roblox stock has fallen 49% since the pick was made.

Even with the downgrade from Jefferies, Wall Street remained relatively bullish on Roblox.

The stock has an average Overweight rating and a price target of $49.34, based on the 32 firms polled by FactSet. Roblox stock has 15 Buy ratings, 14 Hold ratings, and three Sell ratings.