Roblox makes its stock market debut, goes toe-to-toe with EA

Shares of Roblox Corporation were traded publicly for the first time today on the New York Stock Exchange. Up from a $45 per share reference price, stock in the online game platform started selling at $64.50 per share, rising to above $70 at its peaks before settling at $69.50 for the day. At present, the company's market capitalization—the value of all stock outstanding—is $38.26 billion. That puts Roblox among the largest publicly traded videogame companies in the world, with a higher market capitalization than game giants like Ubisoft, Take-Two, and CD Projekt. Roblox's market cap even pushed past EA's $37.4B. 

Roblox is one of the most popular games out there, a parallel to Minecraft in some ways, but more than that, a platform for game development. Developers make games through Roblox's tools and can then profit off of them via an in-game currency called Robux. An average of 32 million players log on to Roblox daily, and in fiscal year 2020 Roblox users spent $1.9 billion on the game platform. Roblox developers are paid 70 percent of the money spent on their games, and more based on the amount of time that premium Roblox subscribers spend in what they've made.

Despite these numbers, Roblox doesn't make nearly as much money as the companies it's being valued alongside. Roblox expects revenue of $1.4 to $1.5 billion this year, while EA expects $5.8 to $6.1. The value of Roblox to investors, then, is about its future growth potential rather than what it's doing right now.

Notably, this debut was not what's called an Initial Public Offering, or IPO, which is designed to raise money for the company by creating new shares. This was instead a direct listing, where company owners are simply allowed to sell their stock on the public market, a strategy which tends to increase or preserve the value of the company's stock for existing shareholders. Direct listing was the strategy Spotify, and to a lesser extent, Slack, used to successfully raise their value. Should the direct listing prove fruitful, as it has so far, it will be easier for Roblox Corporation to raise money in the future.

For more on Roblox, and explainers of how the game works, check out our dedicated Roblox page.