Roblox is Going Public

The year is 2004 and buddies Erik Cassel and David Baszucki have formed a project called DynaBlocks where members can play user created games through a programing language called LUA, 2 years later the name was changed to Roblox Corporation and in September of 2006 the first edition of the software hit PCs. Today the platform is home to more than 165 million users with 32.6 million daily active users and a strong hold on generation z with more than half their users under the ripe age of 16. The company will debut Wednesday under the ticker symbol RBLX on the NYSE and will look to fetch a $29.5 billion valuation which would be 7x more than the last private funding round that pegged the company at $4 billion. RBLX will bypass the typical IPO process and enter the public markets through the first Direct Listing of 2021. Direct Listings allow companies to sell existing shares that are owned by employees and insiders not issue new ones thus letting current shareholders cash in without the inconvenience of lock up periods. The advantage of a DL over IPO is that you can come to the markets without diluting company equity and without underwriters to eat up certain listing costs. Roblox grew revenue 82% in 2020 on the back of a pandemic that left not only kids but adults at home to pick up things like mobile gaming. Industry buzz has been heating up with the acquisition of GLUU Mobile by EA Electronics for $2.4 billion and other takeover candidates like Zynga (ZNGA) growing fast. Roblox has solid brand awareness with only 6.3% of all revenue going to sales and marketing in a huge growth year. Its important to note that Roblox was supposed to debut back in December but executives decided the IPO market at the time was too hot with names like Airbnb (ABNB) and DoorDash (DASH) hitting the wire and postponed the listing. Last month the company was at another crossroads with the SEC asking for more additional information on their virtual/digital/crypto currency Robux. PRO TIP: buying stocks the first day they hit the markets can be extremely risky as the private markets and public markets usually value companies very different, sometimes way higher or sometimes way lower.