Roblox Levels Up

Roblox’s Direct Listing

Roblox (RBLX), the video game platform, made its public debut yesterday through a direct listing. Shares were up about 54.4% at the end of the trading session.

A direct listing means that a company sells its shares without the help of an investment bank or other underwriter. This strategy is less expensive, but sometimes riskier than a traditional IPO. Slack (WORK), Spotify (SPOT), and Palantir (PLTR) are a few other companies which have chosen to go public through direct listings over the past few years.

How Roblox Generates Revenue

Roblox is a free platform offering tens of millions of multiplayer video games. These games are created by players with tools provided by the company.

Roblox generates most of its revenue by selling “Robux,” a virtual currency which players can use to buy perks within games—everything from virtual pets to vehicles to accessories can be purchased. Roblox also offers a subscription service through which users can buy monthly allotments of Robux at a discount.

Roblox’s Next Mission

Last year, Roblox’s revenue was $923.9 million—up from $508 million in 2019. The company also posted a loss of $253 million in 2020, which is up from $71 million the year before. Demand for video games has boomed during the pandemic as people have looked for ways to pass time at home. Roblox had about 33 million daily users last year. More than half of those users are under the age of 13.

Roblox does not expect business to slow down as more people receive COVID-19 vaccinations and more in-person activities begin to take place. The company predicts that its revenue will climb between 56% and 64% in 2021. It also expects its daily user count to rise as high as 36.4 million thanks to recent efforts to attract older players and players in Europe and Asia.

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