Shares of Roblox (NYSE: RBLX) were down about 5% after the market opened on Tuesday but had erased those losses by the early afternoon. The culprit was Barclays analyst Mario Lu, who initiated coverage of Roblox with an underweight rating and a price target of $20.  

The analyst said Roblox is overvalued compared to social media stocks, and also faces obstacles growing its developer base because it takes such a high cut of revenue made from content. The stock is down 65% year to date, underperforming the S&P 500, which has fallen 23%. 

Lu sees future growth being a challenge for Roblox, since its highest-monetized regions like the U.S. and Europe are already 30% penetrated. He also thinks Roblox's take rate of 71% hurts the company's ability to attract developers to the platform, which it relies on heavily to provide the content that brings in users.

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Source Fool.com