Roblox makes video games differently — now it's going public (differently)
Diamonds on my Roblox... Online gaming company Roblox just raised $520M from private investors ahead of its public debut, leveling it up to a $29.5B valuation — that's more than 7X its February 2020 valuation. If you haven't heard of Roblox, that's probably because you're over the age of 15. It's basically the YouTube of user-created games, except it also lets you play/chat with friends. Roblox launched in 2006, but exploded in 2020:
- ~75% of American kids ages 9 through 12 now play Roblox. Homebound tweens flocked to the platform for virtual playdates and b-days.
- Roblox now has more than 31M daily users, up from 18M in September 2019. It's still losing money, but sales grew 68% in the first three quarters of 2020 (from the same period in 2019).
But how does it make those Ro-bucks?... With Robux. While games are free, kids pay for virtual currency to upgrade their avatars or get super powers. When someone spends in-game, Roblox gives a 24.5% cut to the game's developer. In exchange for all of that content, Roblox shoulders the app store and cloud hosting costs, providing a free (popular) platform to develop games.
IPOs are losing points... Roblox was planning to go public through a traditional IPO. Then it watched Airbnb and DoorDash shares open on the stock market at roughly double their IPO prices, and said "no thanks." Companies that are going public only raise money when they sell to VIP investors in the IPO — so Airbnb and DoorDash didn't benefit directly when their shares soared post-IPO (if anything, they lost out). So Roblox has chosen to use a rare Direct Listing, where no new shares are created. This cheaper, faster option is becoming more common as IPOs lose favor.