March 12, 2021
Gaming platform Roblox went public on Wednesday and saw its shares rise from a reference price of $45 to $69.50, valuing the company at $45 billion. A year ago, the company was valued at $4 billion. The NPD Group reported that a record-breaking $56.9 billion was spent on gaming in the U.S. in 2020, up 27 percent from 2019. Sony enjoyed a 62 percent rise in profit, and Microsoft recorded a first-ever $5 billion in quarterly gaming revenue. In a hot gaming market, Roblox delayed its listing to more accurately price its shares.
The New York Times reports that New York University professor Joost van Dreunen said, “the game industry’s swimming in cash … it’s just raining money on these people, on these companies.” Advisory firm Games One managing director Evan Van Zelfden said that, “hundreds of gaming startups have sprung up during the pandemic … everybody wants to be the next Roblox.”
As COVID-19 subsides and restrictions loosen, however, van Dreunen said, “there’s going to be a lot less time to play Roblox.” Roblox chief executive and founder David Baszucki countered that he didn’t think the company would lose “all of the amazing people we’ve gathered.”
Roblox was founded in 2004 by Baszucki and Erik Cassel (who died in 2013), and released in 2006. It’s an online ecosystem in which “players can interact and choose from more than 20 million unique games” and use their avatars for any number of activities. Users pay for premium memberships and digital goods using the digital currency Robux.
The company is still unprofitable, although its revenue jumped 82 percent to $924 million in 2020. It has raised $871 million in funding from VC firms. Roblox splits profits 50-50 with developers.
Business Insider reports that, “Roblox shares surged 12 percent at the market open … on its second day of public trading,” with its stock skyrocketed 50+ percent for a $47 billion valuation. Baszucki’s stake is now worth about $4.6 billion. In comparison, Electronic Arts is valued at $37 billion, and Microsoft’s “priciest acquisition” was ZeniMax Media for $7.5 billion.
CNBC reports that Index Ventures, which first invested in the company in 2017, “now owns a stake worth $3.7 billion.” Index Ventures founding partner Neil Rimer first met Baszucki when they were both at Stanford University in the 1980s. Baszucki was already working on the idea of Roblox at that time.
SensorTower reported that Roblox had revenue of $45.7 million in 2015 and, in 2018, generated $325 million.
Baszucki’s ultimate goal is to create a metaverse, and at Greylock Partners, which led a funding round in the company in 2018, managing partner David Sze said the company is in a position to realize the goal of “a virtual shared space where people can share all kinds of things.”
Gamefam Aims to Be the First Big Gaming Company Built on Roblox, TechCrunch, 3/11/21
Eye-Popping Stats About Roblox, the Wildly Popular Game Platform That Spiked 15% in its Public-Trading Debut, Business Insider, 3/10/21
Welcome to the Metaverse, the Sci-Fi Dream Behind Roblox’s $38 Billion Valuation, CNBC, 3/10/21