Roblox Stock: When Is the Video Game Platform Going Public?
Update: March 8
Roblox’s direct listing is still planned for March 10th, if you’re looking for more details on the IPO, here’s the main “need to know figures”
- Roblox plans to directly list 199 million shares.
- The company’s most recent funding round valued shares at $45 a piece and the entire company at $29.5 billion. It’s likely Roblox shares will trade higher than this level on their first day.
- The shares will likely be available for public purchased around mid-trading day on March 10th.
- Roblox saw $1.9 billion in bookings during 2020.
If you’re looking for all the most important information to know on Roblox before it goes public, we’ve detailed everything you need to know below.
What is Roblox?
Roblox is one of the most popular video game platforms in the world, with more than 100 million global active users spending more than a billion hours per month on the site. The system allows users to program their own games and play those created by other users. According to the site, its millions of developers have created more than 18 million experiences for players. Its platform is especially popular with younger players, but the company has massive expansion ambitions in the years ahead.
Expected IPO Date:
March 10, 2021
- As of February 2021, Roblox is valued at a reported $29.5 billion, which is up 637.5% from its value in early 2020.
- Roblox is not currently public, so you can’t yet buy Roblox stock. However it plans to begin trading publicly on March 10, 2021 through a direct listing.
- Roblox is one of the most popular videogame platforms in the world with 32.6 million daily active users.
- The company is one of the leading investment ideas for the “metaverse” -- the concept of a virtual shared space that in time could become a more immersive internet.
- Roblox is mostly made up of kid-oriented games. While the platform could expand, it's still facing a more limited audience.
- Roblox will be richly valued upon its public market debut. The company last raised funds at a $29.5 billion valuation. That’s a rich price to pay vs. the $613.9 million in sales it recorded in the first nine months of 2020.
Roblox’s online gaming and video game creation platform has experienced explosive growth recently. The company announced on February 22nd that it plans to directly list 199 million shares of stock on March 10th.
What does a direct listing mean for investors? What ticker symbol will Roblox trade under? Why should you buy it? All those questions and more are answered below!
Roblox News & Analysis
- February 22: Roblox Entering the Stock Market March 10
- February 4: 4 Reasons to be Excited for the Roblox IPO
- January 24: The Roblox IPO is Coming — Here’s What You Need to Know
- November 28: Roblox Files to IPO
Why Investors Are Excited about a Roblox IPO
Roblox Corp. is one of the fastest-growing online gaming platforms. Users of Roblox can play and build their own games and experiences for other Roblox users all within the company’s platform.
Launched in 2006 by David Baszucki and Erik Cassel, Roblox flew under the radar for years before an explosion of user interest more recently. The worldwide pandemic helped accelerate the number of people using the platform, which has more than 31 million daily active users, as of September 2020.
Wall Street is excited about an upcoming Roblox stock market listing because the company is growing quickly and tapping into a massive online gaming market that will be worth an estimated $196 billion in 2022.
It’s clear that online gaming is far more than child’s play, and with Roblox already releasing an official prospectus and saying that it will go public through a direct listing on March 10, investors are chomping at the bit to buy Roblox shares. Below are a few things you need to know before investing in Roblox.
Bull Case: Why Buy Roblox Stock?
Big surprise, online gaming has grown during the pandemic. It’s not that gamers didn’t already love playing games before lockdown and social distancing, but apparently, escapism thrives during difficult times. Who knew?
Roblox’s revenue spiked 82% in 2020 to $923.9 million. This revenue spike came thanks to an 85% surge in daily active users (DAUs). At the end of 2020, the company reported 32.6 million DAUs.
Not only are more people flocking to Roblox’s gaming platform, but they’re spending more time with the company’s games as well. The amount of “hours engaged” jumped from 9.4 billion in 2018, to 13.7 billion in 2019, to 30.6 billion in 2020.
With the jump of daily hours growing 124% while daily users grew 85% you can see that the amount of time each of Roblox’s users is spending on the platform is also growing.
More users spending lots of time on Roblox’s platform resulted in the company’s bookings increasing 171% in 2020, to $1.9 billion.
Roblox makes money by selling a premium version of the gaming platform to users and through the company’s Robux digital currency. Robux can be used within games to buy new features and can then be traded in for real-world money.
Add all of this to the fact that Roblox has a robust community of nearly 9 million active developers creating and updating games on the platform and it becomes pretty clear why investors are getting excited about this company.
Bear Case: Why Pass on Roblox Stock?
As compelling as a Roblox investment may seem, it’s not without its risks. Video games are being created by nearly every major technology company and mobile gaming is at users’ fingertips every second of the day.
Here’s how Roblox described its competition in the company’s S-1 filing, which is an official U.S. Securities and Exchange Commission (SEC) form that’s filed before a company lists its shares on the stock market. It’s a little long, but worth skimming just to get the clear competitive picture:
“We compete for users and their engagement hours with global technology leaders such as Amazon, Apple, Facebook, Google, Microsoft, and Tencent, global entertainment companies such as Comcast, Disney, and ViacomCBS, global gaming companies such as Activision Blizzard, Electronic Arts, Take-Two, Valve, Unity, and Zynga, online content platforms including Netflix, Spotify, and YouTube, as well as social platforms such as Facebook, Pinterest, and Snap.”
Ok, so Roblox essentially says that the entire internet is its competition. That’s a heck of a David vs. Goliath comparison but it gives investors a clear picture of just how much digital entertainment people have access to and why the company could lose this fight.
If battling the world’s largest technology companies wasn’t enough to deal with, Roblox says that some of its recent growth can be attributed to the COVID-19 pandemic and that it may not see the same results in the future.
The company said in its S-1 that “the COVID-19 pandemic could accelerate adoption of our platform,” but added that “this increase in engagement and monetization may be temporary and will likely moderate over time as shelter-in-place orders and other related measures and community practices evolve.”
And finally, while Roblox’s financials are mostly moving in the right direction, the company still posted a net loss of $253 million on $924 million in sales in 2020.
Lots of young, fast-growing startups aren’t profitable when they go public, so the company’s net loss isn’t necessarily terrible, but just another thing investors should consider if they want to buy the company’s shares.
When Can I Buy Roblox Stock?
Roblox is still a private company, so you can’t buy the company’s stock just yet. The good news, however, is that Roblox plans to go public soon through a direct listing, rather than an initial public offering (IPO). The company says that its shares will be listed on the New York Stock Exchange (NYSE) rather than on the NASDAQ exchange.
Roblox said in its S-1 filing that it plans on going public on March 10, 2021. So the short answer is that you’ll be able to buy Roblox stock very soon!
A traditional direct listing allows a company’s shares to trade publicly, without the company issuing any new shares. When this happens, a company doesn’t raise any new funds when it goes public because there are no new shares to sell.
While Roblox is going public through a direct listing, the company will issue new shares and therefore raise money by going public. The SEC made a change in late 2020 that allows companies to sell new shares along with current shares. A direct listing typically saves companies money because they don’t have to pay underwriters to handle the IPO.
But why is Roblox doing a direct listing, rather than a traditional IPO? The video game company said in its S-1 that, “Due to market volatility and the performance of other recent underwritten initial public offerings” the company decided to go with a direct listing.
Roblox’s statement is likely referring to Airbnb and DoorDash, which both went public in December 2020. The share prices of these companies skyrocketed when they began trading, much higher than their initial listing price, which meant that the companies lost out on money they could have raised if their shares were priced correctly for the IPO.
By going public through a direct listing, Roblox should be able to raise money by selling new shares, without worrying about the share price spiking so high that it misses out on raising more capital.
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When Can I Buy Roblox: How Its Direct Listing Works
Direct listings are a little different than traditional IPOs. For example, while IPOs have shares allocated before they begin trading (which is why it’s hard for many investors to purchase until after the stock has popped or dropped in early trading), direct listings allow available shares to be directly offered into the market. So, there’s very little in the way of big Wall Street banks involved.
The day before Roblox begins trading, its stock exchange will issue a “reference point.” You can think of this as a guidepost for its anticipated share value. Spotify chose a direct listing in 2018 and its reference point was $132 per share, but once its share began trading that price quickly jumped to $169.
Once Roblox shares are listed, there will be a short period where market participants conduct an auction that looks for an “equilibrium price” that matches supply and demand. Once this occurs, the stock will begin trading in broader markets.
Roblox Stock: Who Owns It Now?
Roblox has gone through nine funding rounds and has raised a total of $855.7 million. The video game company’s latest funding round was on January 6, 2021, its Series H round, where it raised $520 million.
Throughout its nine funding rounds since 2005, its investors include Altos Ventures, First Round Capital, Index Ventures, Meritech Capital Partners, Greylock, Tiger Global Management, Andreessen Horowitz, Altimeter Capital, Dragoneer Investment Group, Investment Group of Santa Barbara, Warner Music Group, and Tencent Holdings.
Roblox’s largest shareholder is Altos Ventures, which owns 23.6% of the company, followed by Meritech Capital with 11.2%. Index Ventures holds 10.8% of Roblox, Tiger Global has 8.2%, and First Round Capital owns 6.8%.
What is Roblox’s Share Price
In its most recent funding round, Roblox’s share price traded for $45 per share at a $29.5 billion valuation (more on its funding history is in the section below). It’s likely Roblox will trade at a premium to this level on its first trading day, but the share price gains of recent IPOs have cooled. If you’re looking for how Roblox stacks up as a public company, make sure to read out the section on its S-1 below which details some of Roblox’s most impressive growth metrics.
Roblox Valuation Chart: How Much Is It Worth Now?
Roblox’s valuation increased significantly after the company’s latest $520 million funding round. Roblox was valued at about $4 billion just 11 months ago, but the video game platform company is now valued at about $29.5 billion following its recent funding round.
To put the company’s massive valuation jump into perspective, here’s a chart showing how much the company’s worth has jumped in less than three years.
Investors should be cautious with valuations, as they don’t exactly reflect how well a company’s stock will perform in the market and don’t necessarily mean that the company’s finances are fantastic either. As such, Roblox’s current valuation is simply based on how much venture capitalists have invested in the company and Roblox’s estimated growth.
What is Roblox Stock Symbol?
Roblox isn’t publicly traded on any stock exchanges right now, but the company said in its S-1 filing that it will go public through a direct listing on the New York Stock Exchange and will trade under the ticker symbol RBLX.
The company had originally planned to go public in December 2020, but after seeing other companies — including DoorDash and Airbnb — IPO and then experience their shares start trading much higher than they were initially listed for, Roblox chose a direct listing.
The direct listing will allow the company to sell new shares in the public market, without incurring the same costs associated with a traditional IPO and with a smaller chance of the company pricing its shares incorrectly and missing out on raising capital.
Roblox says that its RBLX shares will be listed “on or about” March 2021.
Roblox S-1: Here’s What You Need to Know
Roblox filed a revised S-1 statement with the SEC on February 22nd that lays out their complete 2020 financials. The S-1 is 332 pages long, so we’ve combed through it to provide the most important information you’ll find.
- $1.9 billion in bookings: While Roblox reported $924 million in revenue, its bookings were more than twice as high. Many high-growth companies recognize revenue over long time periods, which can cause them to look deeply unprofitable even when they’re producing substantial cash flow.
- $524 million in operating cash flow: Once again we see Roblox with a GAAP net loss, but its cash flow picture is much brighter.
- 490,000: Is the number of daily paying users on Roblox. Incredibly, this number was 184,000 in 2019. The game is growing its user base, but the number of paying members is growing even faster.
- 300 developers: The number of developers and creators that earned more than $100,000 or more on Roblox. The more developers a platform can pay full-time wages, the less it becomes a hobby for developers and something they’re fully committed to.
- 70%: Is the percent of voting rights Class B shareholders will retain after Roblox’s direct listing. On March 10th, the company will solely list Class A shares with less voting power.
Roblox Stock: Should You Buy When It Goes Public?
There’s understandably a lot of interest surrounding Roblox stock among retail investors. The company’s top line increased 82% in 2020 and the online game platform company had $524 million in operating cash flow over the same time period.
With daily active users already at 32.6 million and more than 30.6 billion “hours engaged” with the platform, it’s no wonder why investors are keeping an eye on when Roblox lists its shares on the stock market.
But investors shouldn’t underestimate the competitive gaming market. Online users can be very fickle and there are plenty of other gaming platforms and apps to choose from for entertainment.
One of the biggest unknowns for Roblox is how well the company can grow once the pandemic is behind us and people spend less free time at home.
Referring to its recent growth in bookings Roblox said, “We do not expect these activity levels to be sustained, and in future periods we expect growth rates for our revenue to decline, and we may not experience any growth in bookings or our user base during periods where we are comparing against COVID-19 impacted periods.”
In short: Don’t expect the same results from the company that you’ve seen during the pandemic.
This doesn’t mean that Roblox isn’t worth investing in at some point in the future, but investors should be cautious about buying the company’s shares right away because Roblox is going public at the height of its growth. That could generate temporary interest in the company’s stock that isn’t sustainable for years to come.
And finally, even with a direct listing, Roblox’s stock could experience some early volatility if enough investors rush in to buy the stock and then pull back. Newly public companies often experience some significant share price swings and the stock market has proved in 2020 and 2021 that enthusiasm for some stocks, especially in the technology space, can rise and fall quickly.
Frequently Asked Questions
What is Roblox’s stock symbol?
Once Roblox completes its direct stock listing it intends to list under the ticker symbol RBLX. It is believed Roblox’s shares will complete their listing on March 10, 2021.
Is Roblox publicly traded?
As of February 2021, Roblox is not publicly traded. It is anticipated the company will join the public markets on March 10, 2021. Roblox currently plans to utilize a direct listing rather than a traditional IPO.
What company owns Roblox?
Today much of Roblox is owned by venture capital companies. Its direct listing will allow both employees and venture capital funds to sell their stakes into public markets.