The Roblox IPO: How to invest in this gaming up-and-comer

2021 is shaping up to be a year with some exciting companies going public. One great example is gaming platform Roblox, whose unique offering and business model have many investors lining up to purchase the stock. Like Google and Spotify before it, the company is opting for a direct listing rather than a traditional IPO. The company is going public on the New York Stock Exchange (NYSE) using the ticker symbol RBLX. Soon after the listing, the Roblox stock will be available on eToro.

What is Roblox? 

Roblox is a US-based platform intended for both creating and playing games. Its easy-to-use interface was designed so that even people with no coding experience can create games, and even monetise them using the platform’s unique Robux currency.

The company’s most recent financing round was in January of this year. It raised $520 million, which put its estimated market cap at nearly $30 billion¹ at the time. 

While not exclusively created for children, the platform is extremely kid-friendly. More than half of its nearly 200 million daily active users are under the age of 13 and a quarter are under 9 years old². With such a high volume of activity, it is no surprise that Roblox has generated such interest among potential investors ahead of its listing.

The Roblox public listing

Initial reports of Roblox’s public offering discussed an IPO — a traditional initial public offering, which would involve selling its shares to investors before offering them on the stock market. However, the company opted instead for a direct listing, meaning it will distribute its shares directly on the NYSE. 

A direct listing (or DPO), shows that the company is not strapped for cash, which is quite understandable. While like many other up-and-coming startups it is still not profitable, its revenues did double in Q1 of this year³. The company attributed the Covid-19 pandemic and subsequent lockdowns to a significant increase in its user activity and revenue.

What makes Roblox unique?

There are quite a few factors that separate Roblux from other companies in the gaming industry. These include:

  • Growth potential: As mentioned above, the company’s revenue doubled over the first three months of 2021, but it is safe to say it won’t stop there. Becoming a public company means much more pressure to reach profitability, grow its user base exponentially, or both. Therefore, it is likely that the company will pour much effort into attracting even more users.
  • Self-containment: Roblox owns and operates its development platform, game design studio and cloud services, meaning that all of its users stay connected to it whether they are creating a game or playing one. Furthermore, according to the company’s S-1 filing⁵, the average time spent on the platform per user has been growing steadily, reaching more than 30 million hours of user engagement in 2020.
  • Competition: While it is often considered a fallacy to say that a company has no competitors, when it comes to Roblox, this is not that far from the truth. There are other companies with similar platforms and business models, but none have come close to the growth and user capacity that Roblox boasts.

Investing in Roblox on eToro

Soon after going public, the Roblox stock will be made available for investment with 0% commission on eToro. To invest in Roblox, follow these steps:

  1. Go to the Roblox page on eToro.
  2. Click on “Trade.”
  3. Choose whether you wish to go long (BUY) or go short (SELL). Please bear in mind that short-sell trades are executed as CFDs on eToro.
  4. Set your leverage, Stop Loss and Take Profit points. Remember that leveraged trades incur commission.
  5. Click on the “Open Trade” button.

Sources:

  1. https://www.cnbc.com/2021/01/06/roblox-raises-520-million-ahead-of-planned-direct-listing.html
  2. https://backlinko.com/roblox-users
  3. https://www.reuters.com/article/us-roblox-ipo-idUSKCN2AU2U0
  4. https://www.sec.gov/Archives/edgar/data/1315098/000119312520298230/d87104ds1.htm

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