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Roblox IPO Went Up 54% on First Trading Day

Courtesy of Roblox Corporation

The Roblox Corporation divulged their plans for direct listing in January 2021 with the company valued at $29.5 billion. March 10 marked the gaming company’s first trading day, which had the Roblox IPO rally 50% within minutes of its debut on the New York Stock Exchange. Roblox Corp. closed at $69.50, 54% higher than their original reference price of $45, creating a market cap of $37.2 billion for the company.

According to recent filings with the SEC, Roblox ended 2020 with a net revenue of $924 million and a net loss of $258 million. This is a clear sign of tremendous growth when compared to their numbers for 2019, which included a net revenue of $325 million and a net loss of $88 million. Roblox Corp. also managed to hire about 360 full-time employees in 2020, creating a staff of 960 workers. This aggressive hiring activity helped in the rallying of Roblox’s stock. Roblox joins a number of other notable companies to have hit a surge upon going public such as Airbnb, Bumble, and DoorDash. Roblox continued to perform well through the trade week and has now gone up 64% to a price hovering around $72 with a new company value of $46 billion.

Roblox Corp. aims to maintain its tween user crowd, which make up the majority of the 32.6 million daily active users, while exploring ways to attract more from the young adult demographic. The company can thank the surge of player engagement in the past year for the surge in their profits. In 2019, the amount of daily active users was 17.62 million while in 2020, that number nearly doubled with 32.59 million daily active users. The total amount of hours engaged in Roblox in 2020 reached a total of 30.6 billion hours. That amounts to almost 3,500,000 years spent in Roblox.

Roblox managed to grow expeditiously during the 2020 pandemic, but will it continue to perform such numbers after the pandemic subsides? With schools opening and more opportunities for in-person engagement approaching, the blocky adventure game may soon see a decrease in the amount of daily users. Roblox themselves have issued the warning: “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.”

Even though Roblox may never be able to match the numbers they have achieved during the pandemic, their business model remains a valuable asset for the future of education and amateur game development. We look forward to seeing what heads this game will turn next.

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