Roblox goes public

Gaming company Roblox listed on the NYSE hitting a total value of over $45 billion in its first day of trading.

Joshua Franklin and Niket Nishant reported for Reuters:

Shares of U.S. gaming company Roblox Corp closed up 54.4% in its New York Stock Exchange trading debut on Wednesday, valuing the company at $45.2 billion.

San Mateo, California-based Roblox is among the world’s most popular gaming sites for children and offers a host of games across mobile devices and gaming consoles.

Ari Levy provided some background for CNBC:

The company has built one of the top-grossing apps for Apple and Google devices by turning youthful users into game creators without forcing them to learn complicated coding. The company rewards developers by sharing 30% of the revenue from virtual purchases.

Roblox said in the latest update to its prospectus that it paid developers $328.7 million last year, up almost 200% from 2019. That far outpaced the company’s sales growth of 82% last year, when it booked $923.9 million in total revenue.

Dan Gallagher from the Wall Street Journal noted:

Roblox has been generating positive free cash flow consistently—even before the pandemic boosted its business last year. And the valuation looks a bit more reasonable if measured against the company’s bookings, which are projected to exceed $2 billion this year—about 40% ahead of projected revenue.

Roblox’s main challenge might be showing that it can expand beyond its core audience; about two-thirds of its user base is under the age of 14.