Roblox Corp (NYSE:RBLX) made a strong start to its new life as a publicly traded company in Wednesday’s session as the shares surged well above their reference price provided by the New York Stock Exchange earlier this week.
At the closing bell on Wall Street on Wednesday, shares in the online platform, which allows users to build their own video game worlds as well as play games made by others, had reached a price of US$69.50, 54% higher than the US$45 reference price provided by the NYSE.
Wednesday’s listing had initially been planned for February, however, the plan was delayed amid concerns from regulators about revenues from the company’s Robux in-game currency.
The firm also opted for a direct listing, which means existing shares were floated on the exchange with no underwriters or intermediaries involved, as opposed to an initial public offering (IPO) when new shares are created, underwritten and sold to public investors.
In terms of forecasts, Roblox is predicting daily active users (DAU) for its first quarter to be between 37.6-39.6mln, an increase of 59-68% year-on-year, while revenues are expected to come in at between US$320-US$335mln, equivalent to growth of 98-107%.
However, the firm also faces tough comparatives with 2020, which saw lockdown measures confine consumers to their homes and use video games like those on Roblox’s platform to pass the time.
“The world’s largest user-generated games site Roblox is freshly out of the oven and it smells delicious… There is of course the fact that it is certainly a good time to go public nowadays, when there is appetite for anything in the market. But in the case of Roblox, it’s certainly not just the opportune time but the right business model that excites investors, as much as it excites gamers. So Roblox is, and partly by choice, in the right place, at the right time and with the right business model”, said Swissquote analyst Ipek Ozkardeskaya.
“The end of the pandemic will brush off a layer of demand in game industry, but it will hardly reverse the very clear positive trend. Pandemic or not, there is a sizeable organic growth in this business and the online game demand won’t disappear overnight, on the contrary, it will continue rising. And the fact that the platform offers the opportunity to be on each side of the table, as a gamer or a developer is just the rightest [sic] business model that we could possibly think of right now”, she added.
In pre-market trading in New York on Thursday, Roblox shares were continuing their ascent, rising 24.7% to US$86.65.