Online gaming company Roblox went public Wednesday (March 10) via a direct listing on the New York Stock Exchange under symbol RBLX. The NYSE had set a reference price for the company’s stock at $45 per share — the same amount the company sold shares for back in January during a private financing round. Just like a hero in one of its games, though, RBLX stock soared past that figure, opening at $64.50, climbing to a high of just over $73 and finishing out the day at $69.50. That gives the company a market capitalization of $38.26 billion.
The opening price reflected roughly a multiplier of about 29 times 2021’s predicted earnings, according to CNBC.
The impressive success of Roblox’s first day on the open market places it firmly in the column of pandemic winners. Because the company’s main users are kids under the age of 16, when COVID-19 forced those users to stay home, they had more time to explore the platform’s game play and creation features. In fact, the company now has 32.6 million daily users — an increase of 85 percent over 2019. That led to a corresponding sales increase of 82 percent.
While that all made for a banner first day of trading, investors will be keeping a close eye on the stock as schools reopen and kids have less time to play and socialize on the platform. Also, considering the age of the users, much of the money being spent on the site — through proprietary currency known as Robux — was coming from parents who might have done anything to pacify kids who didn’t have normal outlets for their energy. As the world returns to normal, those open purses and wallets may start snapping shut.
Still, Roblox predicts a strong year ahead — if not from more users, then from the same users spending more on the site. The company is forecasting a revenue growth rate of 56 to 64 percent even though it’s anticipating the user growth rate to slow to between 6 and 12 percent.
“We headed into 2020 with strong organic growth which was further bolstered by social distancing restrictions,” Roblox Chief Financial Officer Michael Guthrie said in the company’s guidance statement. “As those restrictions ease, we expect the rates of growth in 2021 will be well below the rates in 2020, however, we believe we will see absolute growth in most of our core metrics for the full year. We also expect that by expanding further into older age demographics and growing internationally in regions like western Europe and east Asia, we will have significant opportunities to grow our business at higher rates again starting in 2022 and beyond.”
At the time of publication, RBLX was sitting around $68.90 in after-hours trading.
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