The Strategist

Gaming platform Roblox goes public with a valuation of $42B

03/12/2021 - 03:03

The US company Roblox, developer of a platform on which users can create their own video games, went public on Wednesday, 10 March. Its shares began trading on the New York Stock Exchange under the ticker RBLX.

Henry Burrows
Henry Burrows
Its stock rose 55% to $69.5 per share in early trading, bringing the company's total value to $45 billion. The stock later declined slightly, but Roblox was still worth $42 billion, compared to about $30 billion valued in January.

Roblox went public through a direct public offering rather than a traditional IPO. In a direct offering, the company starts trading its shares directly on the stock exchange without engaging financial advisers and underwriters in the form of investment banks, and without the long and costly process of preparing for the offering. 

In this case, the company itself does not raise additional funds, as it sells existing shares rather than issuing new ones, and without the support of underwriters, the risks of high volatility after the start of trading are higher. Recently, direct placement, like another alternative IPO, the SPAC IPO, has become more common: last year the messenger Slack and the intelligence software developer Palantir, and previously Spotify, went public in this way.

Roblox was created in 2004 and had 32.6 million daily active users last year. Roblox allows users to create their own games with the tools and game engine Roblox Studio, and the platform now has tens of millions of such games. 

The platform is especially popular among kids: more than half of its users are younger than 13 years old. The company's main income comes from selling internal Robux currency to users, which can be used to buy different in-game items and features. The company's revenue last year increased by 82%, to $924 million, but the company remains unprofitable: its loss last year was $253 million, increasing 3.5 times from $71 million in 2019.