Roblox stock surges on IPO

The gaming platform's large and growing user base attracted strong investor demand.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Roblox (NYSE: RBLX), the world's most popular gaming site for children, debuted on the public markets on Wednesday, initially soaring more than 42% from its reference price of $45 set by the New York Stock Exchange, roughly the same price paid by private investors earlier this year. 

Roblox shares began trading at approximately 1:33 p.m. EST at $64.25, gaining as much as 52% in the minutes following its debut. As of this writing, the stock is still gaining ground, up 64% to about $73.80, valuing the company at roughly $46 billion. 

The company's gaming platform has been a hit with the tween crowd. Roblox's 32.6 million daily active users (DAUs) grew 85% year over year in 2020. Engagement also soared, as hours spent increased 124% to 30.6 billion hours, or roughly 2.6 hours per user per day.

In recent filings with the Securities and Exchange Commission (SEC), Roblox said that for the year ended Dec. 31, 2020, it generated revenue of $924 million, up 82% year over year, accelerating from 56% growth in 2019. Losses also grew at a rapid clip, with a net loss of nearly $258 million, worsening from a loss of $71 million in 2019. 

Roblox originally planned its initial public offering (IPO) in December, but the company postponed its debut in the face of triple-digit opening-day stock-price gains by companies including C3.ai (NYSE: AI) and Airbnb (NASDAQ: ABNB), which gained 120% and 112%, respectively, on their first day of trading. This made the pricing of its shares more difficult, with companies leaving billions of dollars on the table.

In light of the uncertainty, Roblox eventually settled on a direct public offering (DPO), or direct listing, hoping it would gain greater control over the pricing in the process.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Airbnb, Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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