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Roblox valued at $45.3B in record-setting direct listing

Roblox has completed its long-awaited direct listing on the NYSE, closing at $69.47 per share for a fully diluted value of $45.3 billion—a gargantuan valuation for a video game company that rose to prominence and saw massive growth during the pandemic.

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Roblox has completed its long-awaited direct listing on the NYSE, with shares closing at $69.47 for a fully diluted value of $45.3 billion—a gargantuan valuation for a video game company that rose to prominence and saw massive growth during the pandemic.

Roblox’s valuation in its debut makes it the most valuable gaming company to go public, according to PitchBook data. Its value is more than twice that of video game software company Unity Software after its IPO last year.

Among the handful of companies that have opted for a direct listing, Roblox’s first-day value outranks them all, surpassing Spotify’s $26.5 billion market value at the close of its trading debut in 2018.

Roblox opted against raising money in choosing a direct listing, a new option that the SEC approved for the NYSE in December. Instead, the company raised $520 million in January led by Dragoneer and Altimeter Capital Management at a $29.5 billion valuation. Last year, Palantir and Asana revived the direct listing with back-to-back offerings in September. Roblox was valued at just $4 billion in its Series G round in February 2020, according to PitchBook data.

The gaming company recorded $924 million in revenue last year, an 82% increase from 2019. Roblox’s net loss swelled from $71 million to $253 million over the same period.

Series C investor Altos Ventures is the firm’s largest shareholder with a 21.1% stake, followed by CEO David Baszucki (11.9%), Meritech Capital (10%) and Index Ventures (9.6%).

Roblox’s platform is especially popular among children and teens, whose long hours spent playing Roblox last year coincided with school closings. The company reported more than 32 million daily active users last year, an 85% year-over-year increase.

The San Mateo, Calif.-based company has differentiated itself from gaming peers by creating a platform that has attracted developers in droves. That achievement was enabled in part by the ease with which developers can get paid through Robux, an in-game currency.

Roblox game developers and studios, which earn a portion of each transaction from their games and digital products, were paid $329 million last year. Just a small fraction of the platform’s active developers were paid—4,300 out of 8 million.

Because of its sprawling scope, the Roblox platform has been described as an early version of the “metaverse.” The term, coined by science fiction writer Neal Stephenson, describes a fully immersive virtual world and has been popularized in subsequent sci-fi works such as Ernest Cline’s “Ready Player One.”

"[Roblox] is well on their way to making the metaverse a reality,” Andreessen Horowitz’s David George and Marc Andreessen wrote in a blog post last year. A16z led Roblox’s $150 million Series G and has backed several gaming startups including Sandbox VR and Improbable.

The growth also presents a number of risks for Roblox. It warned investors that the daily active user growth is expected to slow significantly this year, and that hours spent on the platform are likely to fall. And because many of its games cater to children, the company’s privacy and security risks are especially high, according to an SEC filing.

Roblox’s ascent has been long in the making: Baszucki co-founded the company more than 15 years ago after pivoting from a career in educational software.

It wasn’t until 2017 that Roblox began to attract the kind of funding that has come to be expected of high-flying startups, when Meritech Capital Partners and Index Ventures led a $25 million Series E.

The recent path to public markets was similarly drawn out. Roblox initially intended to hold an IPO in December, but twice delayed the offering. First, the company reportedly had concerns over how other large IPOs like Airbnb and DoorDash were pricing. Then in January, the company again pushed back its debut due to the SEC’s concerns over how it reported revenue, Reuters reported.

Related read: The remarkable rise of Roblox

Featured image courtesy of Roblox

  • james-thorne.jpg
    Written by James Thorne
    James Thorne is a Seattle-based managing editor overseeing PitchBook’s venture capital coverage and data journalism initiatives. He previously reported for GeekWire, Reuters, CNBC and Source Media. A native of Colorado, James graduated from Boston College and received his master’s degree in business journalism from New York University.
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