Markets Mar 12

Roblox surges 54% in debut on NYSE

US gaming company takes advantage of its popularity with children during lockdowns enforced last year during the Covid pandemic; trading debut values company at least $40 billion

Gaming company Roblox surges 54% in debut on NYSE
The Roblox logo is displayed on a banner, to celebrate the company's IPO, on the front facade of the New York Stock Exchange on March 10, 2021. Photo by Brendan McDermid/ Reuters.

(ATF) Roblox – the US company whose games that became popular with children around the world during the pandemic – had a big win on Wall Street on Wednesday, when its listed shares soared 54%. That put the company's value at more than $40 billion.

The firm, based in San Mateo, California, is among the most popular gaming sites for children and offers a host of games across mobile devices and gaming consoles.

The company's stock opened at $64.50 and ended trading at $69.47, up from the reference price of $45 per share set on Tuesday and based on where its stock had been trading in less liquid private markets. 

"We are deeply humbled by the overwhelming support for @Roblox and our public offering today," co-founder and chief executive David "Builderman" Baszucki said in a tweet.

"We recognize the potential ahead of us: to build the platform where billions of people come together to learn, work, and play."

With its Lego-like avatars and easy-to-learn coding for budding programmers, the online gaming app has become a thriving clubhouse for young gamers, most of them no older than 16.

By late last year, more than 31 million users daily were diving into Roblox on mobile, desktop, or console devices and cumulatively spending billions of hours there, according to the Silicon Valley company.

At its closing price, Roblox would have a fully diluted valuation, which includes unvested stock options and restricted stocks, of $45.2 billion and a market capitalization of $38.2 billion.

Roblox said in January it had raised around $520 million in a new Series H private fundraising round in a deal with a fully diluted valuation of $29.5 billion, more than seven times the $4 billion valuation in its Series G round 11 months earlier.

Roblox is going public through a direct listing rather than a traditional initial public offering. This means the company is not selling any shares in advance of its market debut, as is the case with IPOs.

Roblox has benefited from US demand for video games surging last year as consumers, amid lockdowns to curb the spread of the new coronavirus, sought home entertainment.

"We want Covid to end as quickly as possible. At the same time, what we've seen in the midst of Covid is Roblox has been used to bring people together," Baszucki said.

The company is expanding into other countries and is also making inroads with older users, passing the phase where more people over the age of 13 will be on the platform than under 13, Baszucki said.

Goldman Sachs & Co, Morgan Stanley and BofA Securities were the financial advisers on Roblox's listing.

With reporting by AFP and Reuters

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