Roblox vs. Take-Two: Which Gaming Stock Is in a Better Position Now?

Globe and Mail

5 days ago

Roblox Corporation RBLX and Take-Two Interactive Software, Inc. TTWO are two prominent players in the gaming industry, but they represent distinctly different approaches to growth and monetization.
Roblox thrives on user-generated content and a social gaming ecosystem, largely driven by younger audiences. At the same time, Take-Two leans on blockbuster franchises like Grand Theft Auto and NBA 2K for recurring revenues.
As both companies navigate evolving trends in digital entertainment, investors may be wondering which stock offers better upside in today's market environment. Let us break down the fundamentals, growth outlook and valuation to determine which gaming stock stands out as the stronger buy right now.
Case for RBLX
Roblox's recent performance has been aided by strong user growth, higher engagement and effective monetization strategies. Daily active users (DAUs) climbed 26% year over year in first-quarter 2025, nearing the 100-million mark. Engagement metrics also showed strength, with users spending more than 21.7 billion hours on the platform, representing a 30% increase.
Notably, international expansion played a major role. India saw 77% growth in both DAUs and engagement hours, while Japan posted a 48% increase in DAUs. The company is also experiencing a demographic shift, with users aged 13 and older making up 62% of its DAUs, which management sees as a key monetization opportunity.
Roblox is also seeing solid momentum on the creator side, with developer payouts up 39% year over year to $281 million. Initiatives such as price optimization and regional pricing for game passes have helped boost median creator earnings and improve the overall health of the ecosystem.
The top 100 experiences by spending now include a growing number of newer titles, suggesting vibrant content creation. On average, the top 100 creators earned $6.7 million over the past 12 months, and more than 100 developers made at least $1 million, reflecting the platform's improving economic viability for content creators.
Additionally, operational efficiency and innovation are driving margin and cash flow improvements. Cash from operations rose 86% and the free cash flow surged 123% in the first quarter, both surpassing the guidance.
The company is leveraging AI for content moderation, code generation and 3D scene creation, enhancing both internal productivity and developer capabilities. These tools are expected to streamline development, reduce costs and support the long-term goal of capturing a larger share of the global gaming market.
However, Roblox's reliance on discretionary consumer spending introduces some vulnerability in a macroeconomic slowdown. Although management cited historical resilience during downturns and emphasized the platform's low-cost entertainment value, a weakening consumer environment may temper booking growth.
Case for TTWO
Take-Two's growth momentum is underpinned by a strong lineup of evergreen franchises, and newly launched titles across console, PC and mobile platforms. The company's NBA 2K series remains a core pillar, benefiting from consistent innovation and deep consumer engagement across modes like MyTEAM and MyCAREER. This engagement focus has translated into increased user retention and spending.
In parallel, WWE 2K and Civilization continue to expand their appeal, with recent releases introducing immersive features and receiving strong critical acclaim. Rockstar's enduring IPs — Grand Theft Auto and Red Dead Redemption — also continue to outperform expectations, highlighting the resilience of the company's premium content model.
The mobile business, led by Zynga, remains another key growth lever. Zynga has demonstrated a unique ability to consistently generate mobile hits in a tough market. Titles like Match Factory and Color Block Jam have become profitable shortly after launch, thanks to compelling live operations and cross-studio collaboration.
Take-Two is also gaining traction in direct-to-consumer mobile monetization, a strategy that reduces reliance on third-party app stores and improves margins. With a broad global user base and integrated first-party data assets, the company is well-positioned to scale its mobile offerings more efficiently than most peers.
Take-Two's long-term outlook is supported by its extensive release pipeline, including highly anticipated titles like Grand Theft Auto VI, Borderlands 4, and Mafia: The Old Country. The company's approach balances annual sports titles with major narrative-driven games and mobile rollouts.
Management is also investing in the latest technologies, such as VR and platform-specific adaptations, and broadening distribution through partners like Netflix and Nintendo. These efforts are designed to drive both top-line expansion and margin improvement as the pipeline matures.
On the downside, the company is contending with elevated development expenses and an impairment charge related to revised expectations for one of its business units — likely Zynga. While management insists this is an accounting adjustment, it reflects some pressure in mobile forecasts.
Additionally, guidance points to a plateau in recurrent spending from mobile and GTA Online, suggesting some softening in legacy monetization channels. Nonetheless, leadership remains confident that its upcoming slate will mark a financial turning point and reset the company's growth trajectory.
How Does Zacks Consensus Estimate Compare for RBLX & TTWO?
The Zacks Consensus Estimate for RBLX's 2025 sales implies year-over-year increases of 28%. Then again, the consensus estimate for loss per share in the year is pegged at $1.42 compared with a loss of $1.44 reported in the prior year quarter. However, in the past 7 days, loss estimates have widened for 2025.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for TTWO's fiscal 2026 sales and EPS implies year-over-year growth of 6.1% and 31.7%, respectively. Earnings estimates for fiscal 2025 have declined in the past 30 days.
Price Performance & Valuation
The RBLX stock has surged 69.5% in the past six months, outpacing its industry's growth of 15.9%. Conversely, TTWO shares have risen 18.3% in the same time frame.
Price Performance
Image Source: Zacks Investment Research
RBLX is trading at a forward 12-month price-to-sales ratio of 13.16X, above its median of 8.28X over the last year. TTWO's forward sales multiple sits at 5.61X, above its median of 4.90X over the same time frame.
P/S (F12M)
End Notes
Both Roblox and Take-Two offer compelling growth narratives, but they differ significantly in their strategic approaches. Roblox thrives on a user-driven ecosystem with rising engagement, an expanding global user base and strong momentum in its creator economy, which is increasingly monetized through AI-driven tools and scalable innovation. While it faces near-term risks from consumer discretionary trends, its platform-centric model positions it well for long-term digital entertainment trends.
In contrast, Take-Two leans heavily on blockbuster franchises and upcoming major releases, offering dependable brand strength but facing pressure from rising development costs and potential mobile softness. Given Roblox's stronger recent momentum, broader engagement expansion and content scalability, it currently appears to hold a slight edge over Take-Two.
Both RBLX and TWWO carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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