Roblox Stock to Debut Directly on the New York Stock Exchange
Roblox stock is due to be listed on the New York Stock Exchange imminently. But what can we expect from its listing? In our article, we will take an in depth look at Roblox, what we know about its listing and much more!
An Introduction to Roblox
Roblox, founded in 2004, is an online gaming platform and game creation system, which allows users and developers to program games and to play games which have been programmed by others.
Whilst Roblox is free to play, many developers charge fees for in-game items, which are paid for using the virtual currency Robux. Roblox, therefore, generates its revenue from the sale of Robux to its users.
Its business model means that new games get developed without Roblox incurring the costs of development - although it does have to keep its platform competitive.
Despite this financial advantage, in its filing Roblox reports increasing losses of $203 million in the nine months to the end of September 2020, on revenues of $589 million. This compares to $350 million in revenues and $46m of losses for the same nine months of 2019. Increasing costs on infrastructure and on R&D were major contributors to the loss.
As experienced tech investors know, large losses are far from rare in fast-growing technology companies like Uber and AirBnB.
After attracting a relatively small user base for the majority of its history, Roblox began to grow more rapidly in the second half of the last decade and, due to the change in lifestyle imposed by the coronavirus pandemic, has enjoyed a drastic surge in popularity in the last year.
When Will Roblox Stock Be Available to Buy?
The company behind the gaming platform, also called Roblox, was scheduled to go public via an Initial Public Offering (IPO) in December last year.
However, following the remarkable first day success of Airbnb and DoorDash, both of which soared more than expected on their debut, Roblox delayed their IPO amid fears of leaving too much cash on the table.
They have subsequently announced that they will now instead be going public through a direct listing, which will see existing shareholders and employees able to sell their Roblox stock to new investors on the stock exchange straight away.
Although a date is yet to be announced, according to an SEC filing, Roblox expects to go public in February, meaning that we could see a listing date confirmed in the next couple of weeks.
What Can We Expect From Roblox’s Listing?
Despite the turmoil of last year, 2020 was a very strong year for technology stocks in general and gaming stocks in particular.
We have already mentioned the first day success of Airbnb and DoorDash, but before both, on 18 September 2020, Unity Software Inc, a game development platform, also went public. Its share price jumped 44% on its first day on Wall Street and has since continued its upward momentum.
The success of Unity Software Inc is likely to fuel confidence among potential investors ahead of Roblox’s direct listing.
Coronavirus induced lockdowns and health advice to socially distance from others has led to many people spending a lot more time than usual at home over the last year. This worldwide change in behaviour has seen more people than ever turning to video games to pass their time and escape reality.
Furthermore, Roblox’s popularity is just as much due to its social aspect as the gaming experience, with users able to host virtual birthday parties and other events which have been less safe to do in person.
Therefore, 2020 saw a year of dramatic growth for Roblox, whose third quarter revenue was up 91% from the previous year to $242.2 million.
The company reported that, in the first nine months of 2020, they had 31 million daily active users. That figure was up a staggering 82% from the same period of 2019. Furthermore, in July 2020, Roblox announced that they had 150 million monthly active users on its platform, which was almost 20% more than its main competitor, Minecraft (126 million monthly active users).
The Future
As the above figures suggest, the Roblox stock listing comes at a good time for the company.
However, with covid vaccinations being rolled out around the world, it is difficult to predict whether the company’s long term future will be as successful as their recent performance.
There is speculation that a lot of the habits formed during this pandemic will continue to some degree once life begins to return to normality. More meetings via Zoom and less business trips. More working from home and less commuting. But will the increased demand for video games maintain its current level in a post-pandemic world?
The Investors and Funds Behind Roblox
In the first week of the year, Roblox announced that it had raised $520 million through a new round of funding, which put the company’s value at around $29.5 billion, about seven times higher than its $4 billion valuation of February 2020.
This latest round of funding was led by Altimeter Capital and Dragoneer Investment Group, with Warner Music Group also a notable participant.
Other stakeholders who participated in previous funding rounds include Altos Ventures, Index Ventures, Meritech Capital and Tiger Global Investors.
If you are interested in learning more about the upcoming Roblox listing, you might want to watch the video below:
Can I Invest in Roblox With Admiral Markets?
Yes, you will be able to purchase Roblox stock with an Invest.MT5 account!
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