Roblox (RBLX) begins buying and selling at $ 64.50 after being straight listed

Roblox, the children’s gaming app that grew in popularity during the pandemic, traded at $ 64.50 on the New York Stock Exchange on Wednesday, giving the company a market cap of $ 35.5 billion.

Roblox went public via a direct listing, followed by other tech companies like Spotify, Slack, and Palantir. Rather than raising fresh capital in exchange for new shares, Roblox allowed existing shareholders to sell immediately with no lock-up period.

The NYSE opening price represents a 43% increase over a private round of funding in January when the company sold shares for $ 45. The NYSE set a reference price of $ 45 on Tuesday, although no stock changed hands at those levels. The reference price tends to reflect trading in the private market and does not indicate where a stock will open.

Based on a fully diluted number of 652 million shares, including restricted stock units convertible into common stock, the company is valued at $ 42.05 billion.

Roblox is hitting the market after an explosive year of growth, mostly from kids stuck at home after Covid-19 forced schools to close and sports leagues to close. In Roblox, one of the most successful apps on Apple and Google devices, users create avatars that they can use to move between the service’s millions of games, navigate theme parks, adopt virtual pets, and fight enemies with their friends.

Revenue increased 82% last year to $ 923.9 million. However, Roblox’s net loss surged from $ 71 million in 2019 to $ 253.3 million as the company nearly tripled the amount it paid developers under its revenue-sharing program. More than 1,250 developers made at least $ 10,000 from virtual sales in their Roblox games last year.

The New York Stock Exchange welcomes Roblox (NYSE: RBLX) executives and guests to celebrate its direct listing today, Wednesday, March 10, 2021.

NYSE

Roblox had planned to go public through a traditional IPO late last year. The company delayed its offer after Airbnb and DoorDash debuted and undervalued their stocks, resulting in a huge discount for new investors. Roblox opted for direct listing and took out a smaller round of funding in January to minimize dilution.

The company postponed its debut again last month and adjusted its financial data after the SEC reviewed the way it records revenue from Robux, its digital currency.

Roblox is a particularly difficult company to evaluate as there is no telling what will happen when schools reopen and the kids are back playing with their real friends. The company has added content for an older audience, like virtual concerts, meet-ups, and educational experiences, but it still relies primarily on kids using their parents’ money in the first place.

“Roblox has been growing for 15 years, driven by our community, driven by great content, driven by our developers, and driven by our ability to do things together. This is a long-term growth path, and we believe it will continue to do so in the future.” ” Even after Covid, Roblox CEO David Baszucki told CNBC’s “Squawk Box” early Wednesday.

Roblox predicts rapid growth in 2021, albeit at a much slower pace than last year. Revenue is expected to grow between 56% and 64% to $ 1.44-1.52 billion, the company said last week. This suggests higher revenue per user as the company sees the number of daily active users only increase by 6% to 12% while the total participation hours are expected to remain roughly unchanged.

“We started 2020 with strong organic growth, which was further supported by social distancing restrictions,” said Michael Guthrie, Roblox’s chief financial officer, in the policy statement. “As these constraints ease, we expect growth rates in 2021 to be significantly lower than in 2020. However, we expect to see absolute growth in most of our key metrics for the full year.”

At its opening price on Wednesday, Roblox is estimated to be 29 times sales for 2021 based on the middle of its forecast. That’s a little more than software developer Unity, which is valued at 27x futures and is significantly higher than game companies like Zynga, Electronic Arts, and Playtika, all of which have single-digit multiples.

Correction: This story has been updated to take into account that Roblox had a market cap of $ 35.5 billion with an opening price of $ 64.50.

SEE: How Roblox became an immensely popular $ 30 billion gaming platform

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