Roblox stock offering of the week, began trading Wednesday with the stock jumping 54%.
American shares Roblox fired on Wednesday (10), during the company’s debut on the New York Stock Exchange. The company that operates with a gaming platform went public through direct listing – without IPO, therefore – and saw the value of the shares rise 54.4% in its first day of trading.
Now valued at over $ 45 billion, the company went public with each paper estimated at 45 dollars and ended the day with shares traded for 69.50 dollars each. The idea was to raise just over 1 billion dollars with the operation that had a market value of 29.5 billion dollars until then.
Existing stockholders have registered about 199 million shares for sale, but 388.2 million shares could potentially be sold. Unlike in a traditional initial public offering, the company isn’t raising new capital. Instead, holders will sell stock they already own.
With roughly 652 million shares outstanding, Roblox has a market capitalization of $45.3 billion based on ending share price of $69.50. That is up 53% from its valuation in its most recent funding round. The $45 reference price, issued by the NYSE late Tuesday, was intended as a guide that informs the public of recent private trading activity.
Founded in 2004, Roblox hosts child-friendly games focused on digital characters resembling Lego blocks. An average of 37.1 million people come to Roblox daily to play games.
Pedro Palandrani, a research analyst at Global X, said the videogame industry represents an enormous opportunity. The gaming sector is expected to grow from $175 billion in total sales in 2020 to $300 billion in sales by 2025, he said. “That’s larger than the Hollywood movie and film industry,” Palandrani said.
Roblox competes against traditional videogaming companies like Electronic Arts (ticker: EA) and Ubisoft, but is also challenging other entertainment options such as Netflix (NFLX) and YouTube.
Roblox isn’t purely a videogame company anymore, Palandrani said. Roblox’s community of 8 million active developers have created games that let children play, communicate, learn, explore and expand their friendships. Children can survive natural disasters together, go scuba diving or even adopt a pet. Roblox combines “elements of videogames, entertainment, social media and even toys,” Palandrani said.
Roblox also offers experiences where children can learn about history, including ancient Egypt, Greece, and Rome. More than 25 experiences on Roblox have surpassed a billion visits, according to its website. One out of every two children up to the age of 16 use Roblox, Palandrani said.