Roblox Schedules DPO
March 10th 2021 Roblox went public through a direct listing (following tech companies such as Spotify, Palantir and Slack). NYSE set the reference price for Roblox’s DPO (ticker symbol RBLX) of $45 a share, which is the same price investors paid in January. However, the price quickly rose to $74.83 and closed at $69.49 a 44% increase from the refernce price). Giving the company a market cap of $35.5 billion.
Online, User-generated gaming platform "Roblox" went public through a direct listing after raising $520 million in a new round of funding in January. Direct Public Offering (or DPO ) is a process that circumvents the normal initial public offering (IPO), where current shareholders sell shares directly to investors.
California-based Roblox is potentially the next unicorn of 2021. What, you never heard of it? And you can’t imagine what the company does? Then perhaps you should ask your children. But be warned, as they may respond using their game-specific language judging you as a “noob” who severely lacks the necessary “obby” skills to be on their level.
Until then, imagine having smashed Fortnight, with Amazon and Twitch. Roblox is an eGaming platform where you can play games, chat with friends, barter with currency in multiple languages and change your avatar on the regular. An interesting aspect of Roblox is that it grants everyone the ability to easily create games within the platform. To be more specific, when I say easy, I mean that my 14-year-old with no interest in coding was able to create a game over the course of a few hours. This open architecture, user-generated content has allowed tens of thousands of games to be developed. The berth and scope of gaming narratives are mind-blowing and could only be from the mad-genius of a ten-year-old. Developers can create new games and post them on the Roblox platform, which makes the offering grow exponentially. With games such as Zombie Apocalypse (name say it all), Sharkbite (pick a boat or become the shark), Escape Waterpark (classic obby), Granny (murderous grandparents), there is something for everyone, although my kids seem to go crazy for Adopt Me were adopting, training, raising and trading pets ranging from a dog (common starter egg) to T.Rex (legendary fossil egg) is the ultimate goal.
Roblox has become a cultural phenomenon with American pre-teens. Roblox states that the "majority of our users are under the age of 13." According to Roblox's S1 filing with the SEC, the company averages 31.1 million daily average users, generating $589 million in revenue in the first nine months of 2020. Currently, Roblox has more than 160 million active users and more than 50% of kids in the US. under age 16. Roblox model is classic Saas with playing and developing free, where players can also purchase in-game digital currency called “Robux” to spend on upgrades. Pre-covid, the Roblox user base was expanding impressively however, covid sent the numbers skyrocketing. With lockdown and a lack of regular school schedules, Roblox was able to pick up the slack as daily user averages rose 82% and revenue growth is 68% from the year prior. Growth in its total revenue, climbed 139% to $312.8 million in 2018, and 56% to $488.2 million in 2019. More recently, the company’s revenue expanded 68% in the first three quarters of 2020 from its 2019 result over the same period, to $588.7 million.
What drove the DPO? First, is probably the fact that number will probably never be better than now. The second is Roblox’s strategy to enter China. As with other publishers, Roblox must work with local partners and it has been rumored they have chosen to work with Tencent. The filing documents indicate that Tencent currently intends to publish and operate a localized version of the Roblox Platform. Roblox says it believes it’s “uniquely positioned” to grow its penetration in China but its “performance will be dependent on” Tencent’s ability to clear regulatory hurdles.
The story is attractive and first day of trading showed plenty of interest.