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Source: Jo Panuwat D, Shutterstock
Summary
- Virtual gaming platform Roblox Corporation is set to join the big fat family of publicly listed companies on Wednesday, March 10.
- The Californian firm is heading for a direct listing on the New York Stock Exchange (NYSE) under the symbol ‘RBLX’.
- Roblox is one of the biggest public debuts in March this year, although it was originally set for an IPO back in October 2020.
Virtual gaming platform Roblox Corporation is set to join the big fat family of publicly listed companies on Wednesday, March 10. The Californian firm is heading for a direct listing on the New York Stock Exchange (NYSE) under the symbol ‘RBLX’.
Originally set to go public in 2020 along with DoorDash and Airbnb, what made Roblox postpone its debut? How important is its public listing now? Before you decide on investing in Roblox shares, let’s answer a few important questions.
Why Roblox Pushed Back Its Public Listing Plan?
Roblox is one of the biggest public debuts set for March this year, although it was originally set for an IPO back in October 2020. But as contemporary US enterprises DoorDash and Airbnb went public with a bang, Roblox pushed its listing plans back. Some reports have pointed that the 2020 October IPO could have been a less advantageous deal for Roblox in terms of generating capital, which possibly could have been a reason behind its postponement.
After the IPO plan fell through, Roblox conducted a Series H private funding in January this year that raised about US$ 520 million. This pulled its valuation to a whopping US$ 29.5 billion, which is substantial climb from a valuation of about US$ 2.5 billion in 2018.
©Kalkine Group 2021
Why Roblox Switched From IPO to DPO?
Ditching its original plan to hold an initial public offering (IPO), Roblox announced in January 2021 that it will go public via a direct public offering (DPO).
There is no hard-and-fast rule that dictates that a firm has the adhere to the IPO route in order to go public in North American markets. In fact, there has been a rising trend among private companies over the past year to take the less traditional paths to a public listing, such a reverse merger with a blank check companies, DPO, etc.
Roblox hasn’t given an explanation behind its change of plans, but a point to consider here is that a direct listing cuts the extra cost of hiring underwriters that comes with IPOs.
How Important Is Roblox’s Public Listing Now?
Based in California, Roblox was founded in 2004 by present CEO David Baszucki and Erik Cassel. Over the years, the online gaming enterprise has raised a capital of about US$ 855.7 million from nine rounds of funding, as per the data on insight provider Crunchbase.
©Kalkine Group 2020
Immersive online gaming experiences have had a following since their introduction to the humankind. But the 2020 pandemic and its enforced homebody culture blew the lid off of online gaming popularity and usage. Roblox’s daily user base expanded by 82 per cent year-over-year (YoY) to cross 31 million in nine months ending September of 2020, according to its SEC filing.
With millions of developers working on coming up with new immersive experiences for Roblox, it is likely that its user base will continue to grow. And while users don’t have to shell out real money to play these games, Roblox gets a share of what they spend on expanding their avatar experiences.
This adds on to its revenue. To put this in context, Let’s look at Roblox revenue growth.
In 2018, its revenue was US$ 312.8 million. From there, it expanded by 56 per cent YoY to US$ 488.2 million in 2019 on an annual level. In 2020, Roblox’s revenue grew at a faster pace, up by a significant 68 per cent YoY to US$ 588.7 million within the first nine months of the year.
Roblox has also expanded its acquisition portfolio in the past year, adding tech firms Loom.ai and Imbellus, and is working on making its presence felt in international markets as well. It is currently said to be in talks with Chinese tech giant Tencent Holdings to expand its business in China, which is known to be top market for video gaming.
It is flat-out impossible to predict a happily-ever-after for any company, especially in a COVID-inflicted world. But based on the information available at the moment, going public at this point is a significantly important episode for Roblox.
