Written by Norman Isaac Mwambazi

Gaming platform Roblox stock surges in NYSE debut

On Monday this week when I talked about what to expect this week, I told you about the planned Initial …

On Monday this week when I talked about what to expect this week, I told you about the planned Initial Public Offering (IPO) of the gaming platform that is Roblox. The company has registered success in the last few quarters, and it had planned to go public late last year but the IPO was postponed amid a wave of exuberance in markets following Airbnb’s (ABNB) and DoorDash’s (DASH) IPOs

Today, Wednesday, March 10, 2021, Roblox has debuted on the New York Stock Exchange (NYSE) under the ticker symbol “RBLX” and its shares jumped up to 60%, pushing the company’s value to more than $46 billion.

Based in San Mateo, California, Roblox is among the world’s most popular gaming sites for children and offers a host of games across mobile devices and gaming consoles.

Roblox’s stock was indicated to open at a range between $67 and $72, up from the reference price of $45 per share, which was set on Tuesday based on where the company’s stock had been trading in less liquid private markets.

Roblox Chief Executive Officer (CEO) David Baszucki called the IPO a milestone in the company’s 15-year existence.

“This is a milestone along a journey that started over 15 years ago. Going public can bring awareness to our company, we can safely show our financials, we can show the value of what we’re doing,” Baszucki said.

At $72 per share, Roblox would have a fully-diluted valuation, which includes unvested stock options and restricted stocks, of $46.8 billion and a market capitalization of $39.6 billion.

Roblox said in January it had raised around $520 million in a new Series H private fundraising round in a deal with a fully diluted valuation of $29.5 billion, more than seven times the $4 billion valuation in its Series G round 11 months earlier.

The gaming platform has gone public through a direct listing rather than a traditional IPO. This means the company is not selling any shares in advance of its market debut, as is the case with IPOs.

Roblox has benefited from U.S. demand for video games surging last year as consumers, amid lockdowns to curb the spread of the new coronavirus, sought home entertainment.

“We want COVID to end as quickly as possible. At the same time, what we’ve seen in the midst of COVID is Roblox has been used to bring people together,” Baszucki said.

In 2020 alone, daily active users on Roblox grew by 85% to 32.6 million, almost doubling the 2019 growth rate that stood at 47%. Users’ hours engaged also more than doubled to 30.6 billion last year.

As it is with most companies around the world, Roblox’s user growth has led to major revenue growth for the company, increasing by 82% to about $924 million last year. However, net losses have also increased from $71 million in 2019 to about $253.3 million in 2020.

The company is expanding into other countries and is also making inroads with older users, passing the phase where more people over the age of 13 will be on the platform than under 13, Baszucki said.