Roblox Surges in Trading Debut as Investors Jump on Gaming Boom

© Reuters.

By Yasin Ebrahim – Roblox surged in its public market debut Wednesday, in a direct listing as investors clamored to get a piece of the online gaming platform that has earned the loyalty of the youngest gamers.

Roblox, which trades under the ticker “RBLX,” began trading at $ 65, well above its reference price of $ 45 a share set by the New York Stock Exchange on Tuesday night, that values ​​the company at $ 39 billion. The shares were up 47% from the reference price just after they opened.

Roblox, a free platform that offers games created by its users – the bulk of whom are under the age of 13, who receive a commission of about 24% on all the Robux, an in-game virtual currency, spent in their game.

During the Covid-19 pandemic lockdowns, activity on the platform has grown, with the number of hours that players spend on the app more than doubling to 30.6 billion.

Daily active users rose 85% in 2020 to 32.6 million that faster than the 48% growth seen in 2019. Daily paying users to 490,000 in 2020, up 166%.

The surge in growth, however, came at cost as the company forked out about $ 328.7 million in fees to game creators, up nearly 200% from 2019, leading to net loss of $ 253.3 million.

That was wider than the net loss of $ 88.1 million and $ 71.0 million in 2018 and 2019 respectively.

“We also expect our operating expenses to increase significantly in future periods, and if our DAU growth does not increase to offset these anticipated increases in our operating expenses, … our results and financial condition will be harmed, and we may not be able to achieve or maintain profitability, “the company said.

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