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Roblox (RBLX) closed at around $69.50 on its first day of trading on Wednesday. Shares began trading at $64.50 each, well above their reference price of $45 set by the New York Stock Exchange on Tuesday.
The stock surged to roughly $74 during session highs, giving the company a market cap greater than $37 billion. Back in January, the online gaming company raised money at a $29.5 billion valuation.
Roblox went public via a direct listing, allowing current investors to sell shares. In direct listings, banks do not set an IPO price, like those seen in initial public offerings. Instead a "reference price" is used.
Roblox's user base has soared in the past year as more people turned to gaming amid the pandemic. The company said its daily active users (DAUs) grew to 32.6 million in 2020, compared to 17.6 million in 2019. Roblox estimates 54% its users are under the age of 13.
The company's S-1 filing shows a robust top-line growth but ballooning losses. Revenue jumped almost 82% year-over-year to $923.9 million in 2020. However, net loss attributed to common stockholders jumped to $253.3 million for the year ending December 31, 2020, compared to $71.1 million in 2019.
However the company's free cash flow is impressive, rising to $411.2 million in 2020, from $14.9 million in 2019.
Roblox's direct listing has been highly anticipated. Some Redditors are increasingly watching the stock action too. A Reddit community focused on the stock, dubbed “RBLX,” doubled in members since Tuesday to around 2,300, according to Bloomberg. Reddit has become a popular forum for retail investors. In January, GameStop (GME), AMC Entertainment (AMC), and other heavily shorted stocks surged after gaining traction on a subreddit called WallStreetBets.
Roblox was founded in 2004 by David Baszucki and Erik Cassel, and it has a unique business model that allows users to create and publish their own video games using its tool set.
The platform makes money through the sale of its Robux in-game currency. With it, users can have an enhanced experience or buy items like clothing, accessories, and other virtual products. Roblox says it retains a portion of every Robux transaction and distributes the rest to developers and creators.
"Our developers and creators do not always cash out their Robux into real-currency," according to the S-1 filing. Some choose to reinvest in developer tools, promote their experiences through ads, or "spend the Robux as any other user would."
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre