What is Roblox, the big new gaming IPO darling?

Roblox, the kid-friendly gaming universe, made a great debut at Wall Street on Wednesday as the company’s share prices closed at $69.50 — a 43% rise from the initial trading price.

But what exactly is Roblox and why did it hold an IPO? Let’s take a look.

What’s Roblox?

Roblox is an online game platform where you can create your own games and play games made by others — think of it as a Minecraft competitor.The title has been around for a long while; the first PC version was released in 2006.

The company released versions for iOS, Android, and Xbox, in 2012, 2014, and 2015 respectively. The idea is to have your own avatar, make friends, buy clothes, and customize appearancesand customize your appearance while playing and creating games using elements available in the expansive environment.

One of the ways Roblox is known in pop culture is its iconic “oof” sound when a player dies. The company had to discontinue briefly that sound because of a copyright dispute with the composer. However, last November both parties came to an agreement, but game developers had to pay $1 to include that sound in their creations.

While the game has been steadily receiving more attention over the last decade or so, the COVID-19 pandemic fuelled its popularity rapidly. A report from CNBC published last April notes the game saw a massive 40% surge in usage in March 2020.

Last June, the game also added new features such as virtual private birthday parties and social gatherings for kids and their relatives to hang out safely in the online world. In November, famed artist Lil Nas X held a virtual concert on the game platform — just like Travis Scott on Fortnite.

How did it reach the IPO stage?

In February 2020, the company raised $150 million from Andreessen Horowitz with a valuation of $4 billion.

According to analytics firm SensorTower, users downloaded the game 159.6 million times from the App Store and Play Store last year, registering a 43% year-on-year growth. It was also the highest-earning mobile game in the US during the holiday season with $6.6 million gross revenue.

All of this led to its newest financing round in January, where it held a direct listing offering (DPO), allowing existing investors to sell some shares. The company raised $520 million trough this round at a valuation of a whopping $29.5 billion.

Roblox initially decided to go public in December, but delayed it and decided to hold a DPO first. Finally, it was listed on the New York Stock Exchange on March 10.

As CNBC reported, while the company was worth $38.26 billion at closing, its restricted shares surged its valuation to $45.3 billion.

In a note last week, the company said that it’s expecting to register revenue between $1.44 billion and $1.51 billion, making its year-on-year growth 56% to 64%.