Video game developer Roblox (NYSE:RBLX) is hitting the New York Stock Exchange today and investors are excited. What should you know now about the Roblox IPO? And what makes RBLX stock stand out?
One thing exciting about Roblox coming public is that it is truly a household name. Its platform for gaming and game creation is popular, especially among teens and tweens. And when the Roblox IPO comes and goes, the company could be worth as much as $29 billion.
With that in mind, here is what you should know about RBLX stock and the Roblox IPO now:
- On Tuesday, the NYSE set a reference price for RBLX stock of $45.
- Unlike traditional initial public offerings, Roblox has chosen to come public via a direct listing.
- This means the company will not be raising any capital.
- Instead, existing shareholders can sell their shares based on market demand.
- Importantly, the Roblox IPO will be the fifth such direct listing. It follows other tech companies like Palantir (NYSE:PLTR) and Asana (NYSE:ASAN).
- The reference price in a direct listing does not indicate the market capitalization.
- However, sources close to the Roblox IPO said a $45 reference price means the company could be worth as much as $29.3 billion.
- This factors in that Roblox has 652 million shares outstanding.
- Luisa Beltran wrote for Barron’s that approximately 199 million shares will the market today.
- Roblox initially filed its S-1 with the U.S. Securities and Exchange Commission to come public before the end of 2020.
- The company delayed however, following debuts by Airbnb (NASDAQ:ABNB) and DoorDash (NYSE:DASH).
- Investors should also note that Roblox is not exactly identical to other game developing stocks.
What to Know About RBLX Stock and the Roblox IPO
At this point, what makes RBLX stock and the Roblox IPO stand out?
One thing investors should definitely note is that Covid-19 has had positive impacts on business. As we reported back in November, Roblox said it experienced rapid growth in the first nine months of 2020. This is because more consumers ever turned to its free-to-play games. Roblox reported that its daily active users nearly doubled, as did its hours engaged metric.
Another thing to note is the unique business model. As InvestorPlace contributor Robert Lakin wrote earlier this week, Roblox outsources its game development. In addition to being a gaming platform, it bills itself as a creation platform for user-generated games. The perk? Roblox gets a ton of content, and developers receive 30% of the proceeds. Roblox says it hopes to spend even more on its developers in the future to incentivize higher-quality games.
So how does Roblox make money? CNBC reports that almost all of its revenue thus far has come from virtual items. Users can develop outfits and avatars and sell them. One young couple brought in $49,000 in one month from selling virtual weapons and custom outfits.
After RBLX stock hits the public markets, that could change. Roblox could roll out in-game ads, and it has already added a premium subscription service and branded content. Keep a close eye on this story.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.