Roblox has recently decided to enter the stock market by selling its own shares. However, there are a few things you should know before you invest. This company’s video game is dependent upon its users to create content and play their games, but are they as profitable as they claim to be?
It is exciting to buy shares on the stock market, especially when it pertains to a game that is dear to your heart. Whether the stock is for you or your child, it is up to you to decide if the Roblox stock is worth the investment of your hard-earned money.
9 It’s A Direct Listing
Roblox decided to go with a Direct Listing over an IPO, which in the end will save them money. If they had decided to go with an IPO, also known as an Initial Public Offering, then they are required to pay underwriters a commission to sell their shares.
However, the downside to choosing a Direct Listing is that there is no guarantee that the shares will sell, but it was a risk that Roblox was willing to take. They will also only sell existing shares rather than create new shares.
8 It Was Officially Opened For Trading On March 10
The company officially went public on March 10, and it was a sight to behold as it has come a long way since its start back in 2006. They had originally planned to do this before the end of 2020, but with other companies like Airbnb and Doordash debuting their own stock, they decided to hold off.
It made it difficult for them to decide what to price their shares and it even pushed them to change course as they went from an IPO to direct listing.
7 Its Ticker Symbol Is RBLX On The New York Stock Exchange
If you are interested in purchasing some shares for yourself seeing as it is the most popular game in the world then you need to know what ticker to look for in order to do so. They have chosen the ticker symbol RBLX, which is just their name with the O’s taken out of it.
There will be both Class A and Class B shares, however, the Class B shares will not be available to retail investors, which is most likely the category you would fall under.
6 Roblox Was Valued At $29.5 Billion
The company was valued at $29.5 billion, which is what they rested on after their review by the Securities and Exchange Commission. They wanted a better way of accounting for the sale of Robux, which they solved before going public a few days ago.
They also raised an extra $520 million from private investors through Series H Funding, which basically allowed them to raise their value by collecting capital from investors. It worked in their favor as they managed to sell to Altimeter Capital and Dragoneer Investment Group.
5 The Reference Price Was Set At $45 Per Share
Whenever a Direct Listing is created they have to set a reference price before going public, and they settled on $45 per share. They requested the help of Morgan Stanley, Goldman Sachs, and Bank of America to help them in this decision, as well as complete any outstanding paperwork.
It can be difficult to land on a reference price, but they decided to go quite a bit lower than Spotify, but double the initial price of Slack and Asana.
4 Some Investors Are Concerned Its Revenue Will Drop Following The Pandemic
The pandemic was a driving force in making Roblox into the company it is today as more and more children found themselves lost in this platform. Its social aspect made it desirable in a time when contact with friends and family was limited, and even though it made it better than Minecraft, many are worried its revenue will drop in the coming years.
When social distancing protocols are lifted it means fewer children will be at home on their devices spending Robux, and more will be back out playing sports or attending events.
3 Their First Day Ended At A Trade Price Of $69.50
Roblox did fairly well on its first day on the market as its shares rose to $69.50 from its original share price of $45. The lowest price was $61.09 and the highest price was $74.67, and they ended with a 54% gain at the end of the day.
This allowed their end-of-day value to rest at about $38 billion, which is quite a jump from its initial valuation and made it worth more than EA and Ubisoft. Only time will tell how these shares will fair on the market, but some have concerns about this stock’s future based on its current trends.
2 They Make Money By Selling Robux And Memberships
This company’s main source of income comes from selling Robux and memberships. Robux is used to buy things like extra items for your avatar, in-game specialties, and it is used for trading purposes. The company also makes money by selling memberships which give players a monthly stipend of Robux, but some worry this revenue will decrease as schools open back up in the coming months.
1 Roblox Does Not Pay A Dividend
A dividend is when a company distributes some earnings to some of its shareholders in a certain class, but Roblox does not offer this to its investors. This can be used to entice investors to buy shares in their company, although, Roblox found this unnecessary as they were able to raise the funds they needed without this.
It really comes as no surprise seeing as they don’t make a profit, and they don’t plan on paying one in the future as even adding more paid access games won’t make a difference.
