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Roblox Surges in Trading Debut as Investors Jump on Gaming Boom

Stock MarketsMar 10, 2021 01:56PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com - Roblox surged in its public market debut Wednesday, in a direct listing as investors clamored to get a piece of the online-gaming platform that has earned the loyalty of the youngest gamers.

Roblox (NYSE:RBLX), which trades under the ticker "RBLX," began trading at $65, well above its reference price of $45 a share set by the New York Stock Exchange on Tuesday night, that values the company at $39 billion. The shares were up 47% from the reference price just after they opened.

Roblox, a free platform that offers games created by its users - the bulk of whom are under the age of 13, who receive a commission of about 24% on all the Robux, an in-game virtual currency, spent in their game.

During the Covid-19 pandemic lockdowns, activity on the platform has grown, with the number of hours that players spend on the app more than doubling to 30.6 billion.

Daily active users rose 85% in 2020 to 32.6 million that faster than the 48% growth seen in 2019. Daily paying users to 490,000 in 2020, up 166%.

The surge in growth, however, came at cost as the company forked out about $328.7 million in fees to game creators, up nearly 200% from 2019, leading to net loss of $253.3 million.

That was wider than the net loss of $88.1 million and $71.0 million in 2018 and 2019 respectively.

"We also expect our operating expenses to increase significantly in future periods, and if our DAU growth does not increase to offset these anticipated increases in our operating expenses, … our results and financial condition will be harmed, and we may not be able to achieve or maintain profitability," the company said.

Roblox Surges in Trading Debut as Investors Jump on Gaming Boom
 

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Comments (8)
Viking Fire
Viking Fire Mar 11, 2021 6:27AM ET
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Missing this is a black eye to older investors, they ignored an importand sector and missed out on a ton of opportunity for too long.
Pe Pt
Pe Pt Mar 11, 2021 3:58AM ET
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My experience with these technology applications is that when you are with the market leaders all is fine. The challenge is that trends can be very fickle. For every game, iPhone, social media, electric car, search engine, there are dozens of others that are now obsolete. When automobiles were first produced over 5000 companies were created and most failed in 5 years. Motorola, Nokia, BlackBerry were leaders before Apple. Commodore, Atari, Nintendo, Pokemon, Candy Crush, Grand Theft Auto all had their day. Of course some mature and adapt into a niche business after high growth. My point is that riding growth is fine while the dream lasts but unless businesses have real earnings and dividends, we are relying on the expectation of continuous growth and someone paying more for the future potential. The question is: Will a competitor appear or taxes are imposed or legislation change or employees expect payment before the business returns income to investors.
jurken damste
jurken damste Mar 11, 2021 2:27AM ET
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by shorting maybe I can recoup the robux I have to fork out every month to my child
Michael Wln
MichaelW Mar 10, 2021 4:30PM ET
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The listing of these gaming stocks reminds me of the dot com boom with some eerie similarities. Exorbitant valuations, losses as far as the eyes can see and no obvious path to profitability driven by an out of control Wall Street.
Sacko Yacouba
Sacko Yacouba Mar 10, 2021 3:41PM ET
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yeos
ZS Beck
ZS Beck Mar 10, 2021 3:10PM ET
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Another useless tech..Good for nothing. A game for children.Are they watching an advertisements on it? Another tech which never will make a profit.Good luck.
Matt Kay
Matt Kay Mar 10, 2021 2:18PM ET
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Praying on children. Lowest tier of bottom feeders
Dennis Kendrick
Dennis Kendrick Mar 10, 2021 2:18PM ET
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ALL video games target kids.
David Ripke
David Ripke Mar 10, 2021 2:18PM ET
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Dennis Kendrick Almost all products target kids in someway or another. If the kids aren’t talking about it usually companies don’t want to sell it. Remember in school when all the kids wanted the Jordan shoes? Those companies played on that Nike is a big target of kids
Star Boi
Star Boi Mar 10, 2021 1:45PM ET
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Watch out you don't get your fingers burned on this. Timing ***big time.
Hugo Pepin
Hugo Pepin Mar 10, 2021 1:45PM ET
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You are right.
Star Boi
Star Boi Mar 10, 2021 1:45PM ET
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Hugo Pepin  US Tech is hanging in by the skin of its teeth. Mitigate the risks till the market can prove itself. Too undecided. I was going to jump on it for a quick profit but had too many other things to do. This tech situation may change after the bond auction. In which case it may show some real legs. But for how long?....
Muhamed Jaffir
Muhamed Jaffir Mar 10, 2021 1:45PM ET
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I agree as well the risk reward at this price point is too high. Tech poised for a crash up then down. there are better ways to make money. This will likely be Affirm 2.0.
 
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