Roblox Topped an impressive $45 Billion on its First Day of Trading.
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A sleeping giant no more. Last Wednesday we saw yet another impressive tech IPO. This time from Roblox Corporation’s global behemoth – Roblox. Roblox debuted on the NYSE on Wednesday March 10, 2021 opening at $72 per share (surging 60% higher than the reference launch price of $45 a share).
Pandemic Boom?
A 60% surge from a reference launch price (based on the funding round)is impressive. However, it pales in comparison to the valuation spike that Roblox has experienced throughout the pandemic.
For context, Roblox’s valuation was just $4 billion in its Series G round in February 2020. It’s currently valued at 45 billion. Meaning in a year the company achieved the coveted x10 growth.
Many speculate that Roblox is the beneficiary of a global pandemic that has forced many of us to remain inside for over a year. As an online gaming platform, Roblox is certainly insulated from the adverse consequences of COVID-19.
Over 50% of Roblox’s users are 12 and under.Lockdown measures have forced kids to stay at home. Coupled with the cancellation of extracurricular sports and colder weather, the primary source of entertainment for kids will be online.
In August of 2020, Roblox had over 164 million monthly active users, with it being played by over half of all children aged 16 and under in the United States. While the pandemic creates favorable conditions for an online gaming platform that in and of itself is insufficient to yield this level of growth. Certainly not at the x10 level.
So what’s Causing the Spike?
Roblox’s underlying business model is inherently conducive to succeeding in the pandemic.
Roblox is an online game platform as well as a game creation system. Roblox’s model deviates from the traditional pay-to-play video game console system. Roblox is both free and enables players to be both producers and consumers.
With Roblox, the game is a service. It is an interesting concept as it permits users to both program games and play games that are created by other users. Additionally, Roblox is a games platform that is comprised of a myriad of games. Games such as Adopt Me!, Vibrant Venture and MeepCity cover a broad spectrum of interests.
They are also functionally diverse. Vibrant Venture is a single-player 2D adventure game. While MeepCity is a massively multiplayer online role-playing game (think Club Penguin). It is a classic catch-all approach.
Future of Roblox?
I suspect that we will see more gaming corporations follow Roblox’s free-to-play model and the evolution of game creation systems.
Investors are not betting on Roblox’s past performance. They are looking at what is under the hood of the engine. While kids being stuck indoors certainly shined the light on Roblox, the company has a bright future independent of the state of the pandemic. Primarily because of the functionality and overarching business model.
There is something for everyone. If you are interested in multiplayer games, single-player games or just developing games, there are options.
Nigel Masenda is currently working at one of the country's preeminent corporate law firms where his work is focused on capital markets and mergers and acquisitions. Nigel received a Bachelor of Arts degree in Political Science and Political Economy. After that, and for a reason that is still unknown, Nigel pursued a JD degree.
In his free time you're likely to find Nigel out on a hike, run, attending a live sporting event or concert (when it's safe) and, most likely, eating baked goods. While the focus of this site may limit the exposure of baked good discussion, if Nige is authoring a piece don't be surprised to find sprinkles (see?) of baked good discussions.
Nigel Masenda is currently working at one of the country's preeminent corporate law firms where his work is focused on capital markets and mergers and acquisitions. Nigel received a Bachelor of Arts degree in Political Science and Political Economy. After that, and for a reason that is still unknown, Nigel pursued a JD degree.
In his free time you're likely to find Nigel out on a hike, run, attending a live sporting event or concert (when it's safe) and, most likely, eating baked goods. While the focus of this site may limit the exposure of baked good discussion, if Nige is authoring a piece don't be surprised to find sprinkles (see?) of baked good discussions.
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