Roblox goes public and is worth more than $ 45 billion

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Roblox is described as a “metavers” in which players can create their own avatars and environments in which to play, such as virtual theme parks or diving.

“Roblox is an amazing community where people create together,” Roblox CEO and co-founder David Baszucki said in an interview with CNN Business on Wednesday. His stake in the company is now worth more than $ 4 billion.

Roblox can be downloaded for free on phones, tablets and consoles. The company generates almost all of its revenue from the sale of its Robux coin, which can be used to purchase in-game virtual items. More than half of these sales are made through app stores Apple (AAPL) and Google (GOOGL).

This is a big business – growing fast.

Roblox reported revenue of nearly $ 925 million last year, up 82 percent from 2019. The company also said earlier this month that it now expects sales to grow another 60 percent this year, at a range between $ 1.44 and $ 1.52 billion.

No slowdown in sight for IPOs or SPACs

Roblox had 32.6 million daily active users by the end of 2020, and the company predicts it will have between 34.6 and 36.4 million by the end of 2021.

Most of the company’s players are children up to 13 years old. But Baszucki said the company is approaching a point where most of its players will not be tweens. He said the 17-24-year-old Roblox user group is growing very fast.

But Roblox mentioned in its documents with the Securities and Exchange Commission that the existence of such a young user base will lead to a deeper control of the platform.

“Increased use of interactive entertainment offerings like ours by consumers, including younger consumers, may lead to more stringent consumer protection laws and regulations that may impose additional burdens on companies like ours,” Roblox said.

This means that Roblox must ensure that the game remains safe for minors who play it and that privacy practices are strictly enforced. The company also has guarantees to ensure that younger users do not spend too much to buy Robux.

Baszucki said he was pleased with the stock market debut, adding that it is good for investors and long-term employees at Roblox, which was founded in 2004, to take a financial part in the company’s success.

Roblox listed shares directly on the New York Stock Exchange, as opposed to issuing new shares in an initial public offering. The NYSE set a reference price of $ 45 per share for shares.

Spotify (PLACE), Weakness (THE WORK) (which is being purchased by Sales force (mRCC)) and Palantir also became public through direct listings.

“For us, a direct listing seems natural. It brings the whole community together and everyone uses the same price when opening trading,” Baszucki said.

How Roblox became the

So what’s next for the company now that it’s publicly traded?

Roblox is not yet profitable. It lost more than $ 253 million in 2020, compared to a loss or about $ 71 million a year earlier.

Baszucki said the company will seek to generate more advertising sales. He stressed that it will be organic. Users, for example, can pay to wear Nike shoes in the game, as opposed to seeing large Air Jordan panels in Roblox.

“The small amounts of advertising we’ve done are captivating and authentic,” Baszucki told CNN Business.

Baszucki, whose username Roblox is builderman, added that he is not worried that Roblox is a fad that will eventually suffer a loss of popularity.

He mentioned that the game continued to add users, even though players have other options, such as Minecraft, Fortnite and increasingly popular among us to play in their spare time.

Roblox joins a growing list of so-called unicorn companies that have gone public in recent months and grown, such as Bumble, Poshmark, Airbnb and DoorDash. The gaming software company Unity went public in September last year, and its shares have doubled since then.

More stock market debuts are expected later this year, with Instacart, Coinbase and Robinhood among the most anticipated new listings.

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