Roblox the desktop, smartphone, and video game you’ve probably never heard of — just completed an IPO that has propelled it into one of the most valuable gaming companies in the world.
Roblox stock, which filed its IPO via a “direct listing” last week, opened its first trading session at $64.50, giving it a market cap of $42 billion.
Founded in 2006, Roblox is a platform for kids and teens that allows users to interact with each other, navigate the map with their avatars, and play millions of multiplayer games created by the users themselves – a business, known in the industry as “social gaming” “.”.
Games range from simple stories like competing to capture the flag and jumping over obstacles to stories based on characters like Peppa Pig and Sonic. Roblox is on everyone’s lips in a very short time: It already has more than 160 million users worldwide and is played – watch out, gurus! Half of all children in the United States.
And the numbers are steadily increasing. With children locked at home due to the pandemic, the number of daily active users has increased by 85% over the past year – and half of them are under the age of 13. These “baby gamers” have spent more than 30 billion hours on the platform, more than double what it was in 2019. But even though Roblox made nearly $1 billion last year, Roblox still lost $252 million .
The IPO valuation includes a 28x increase in estimated revenue for the year – $1.5 billion – and makes Roblox more valuable than gaming giants like Electronic Arts (owners of FIFA, Madden and Battlefield games worth of $37 billion); that Take-Two (from the GTA Classics and Red Dead Redemption; $19 billion); Ubisoft (Far Cry and Assassin’s Creed; $8 billion); and Square-Enix (Final Fantasy, Avengers and Tomb Raider; $6.6 billion).
The company trails just behind Activision (Call of Duty and Candy Crush; $72 billion) and Nintendo, which needs no introduction and is valued at $66 billion on the stock market. The most important step for Roblox was the creation of Roblox Studio, a tool that allows users to create new games within the platform and make money from them. Last year, Roblox paid out more than $320 million to these developers, who in some cases make hundreds of thousands of dollars a year.
The model allows Roblox to generate much higher margins per game than traditional game companies that spend fortunes to develop successful franchises like Assassin’s Creed and Call of Duty. Roblox gets 70% of all revenue from games made by developers, although it doesn’t spend a single penny to create them.
The income comes from the purchase of the so-called Robux (the virtual currency that allows you to buy items in the game) and a premium subscription that offers benefits to the players.
At the same time, the model also creates a network effect: new games attract more users to the platform – developers become promoters of their games themselves – and they can also become developers and enter a virtuous circle. Since the IPO, Roblox stock is up 12%.