Roblox goes public and is worth more than $ 45 billion

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Roblox describes itself as a “metaverse” where players can create their own avatars and environments to play in, such as virtual theme parks or scuba diving.

“Roblox is a great community where people are creating together,” said Roblox CEO and Co-Founder David Baszucki in an interview with CNN Business Wednesday. His stake in the company is now worth more than $ 4 billion.

Roblox is free to download on phones, tablets and consoles. The company generates almost all of its revenue from the sale of its Robux currency, which can be used to purchase virtual objects in-game. More than half of those sales go through the app stores of Apple AAPL and Google GOOGL

That is a large – and fast-growing company.

Roblox posted sales of nearly $ 925 million last year, 82% more than in 2019. The company also said earlier this month that it now expects sales to increase by another 60% this year to reach $ 1.44 billion to $ 1.52 billion.

No delay in sight for IPOs or SPACs

Roblox had 32.6 million daily active users by the end of 2020, and the company predicts it will have 34.6 million to 36.4 million by the end of 2021.

The majority of the company’s players are children aged 13 and under. But Baszucki said the company is nearing a point where most players won’t be tweens. He said the group of 17-24 year old Roblox users is growing very fast.

But Roblox noted in his paperwork with the Securities and Exchange Commission that having such a young user base will lead to greater scrutiny of the platform.

“The increased use of interactive entertainment offerings such as ours by consumers, including younger consumers, may call for tougher consumer protection laws and regulations that could place additional burdens on companies like ours,” said Roblox.

That means that Roblox must ensure that the game remains safe from minors who play it and that privacy practices are strictly enforced. The company also has safeguards in place to make sure younger users don’t spend too much to buy Robux.

Baszucki said he was excited about the stock market debut, adding that it is good for investors and longer-term employees of Roblox, which was founded in 2004, to participate financially in the company’s success.

Roblox listed shares directly on the New York Stock Exchange, instead of issuing new shares on an IPO. The NYSE had set a reference price of $ 45 per share for the stock.

Spotify PLACE Slack WORK (currently being purchased by Sales team CRM) and Palantir also all went to the stock exchange via direct offers.

“To us, a direct listing seemed natural. It brings the whole community together and everyone uses the same price at the opening of the trade,” said Baszucki.

How Roblox became the 'it' game for tweens - and a huge company

So what’s next for the company now that it is publicly traded?

Roblox is still not profitable. It lost more than $ 253 million in 2020, up from a loss of about $ 71 million a year earlier.

Baszucki said the company will strive to generate more revenue from advertising. He stressed that it will be organic. For example, users can pay to wear Nike shoes in-game, unlike big Air Jordan billboards in Roblox.

“The small amounts of ads we’ve produced are compelling and authentic,” Baszucki told CNN Business.

Baszucki, whose own Roblox username is builderman, added that he’s not too concerned that Roblox is a fad that will eventually suffer from a loss of popularity.

He noted that the game kept adding users even as gamers have other choices such as Minecraft, Fortnite and the increasingly popular Among Us to play in their spare time.

Roblox joins a growing list of so-called unicorn companies that have gone public and skyrocketed in recent months, such as Bumble, Poshmark, Airbnb and DoorDash. Game software company Unity also went public last September and its stock has nearly doubled since then.

More IPOs are also expected later this year, with Instacart, Coinbase and Robinhood among the most highly anticipated new listings.

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