Roblox, a popular mobile game that allows players to create their own mini-games, began trading on the stock market yesterday. Since, its value has skyrocketed.
Roblox is an online game that is in a similar vein to Minecraft. Players are able to create their own games, experiences if you will, using Roblox’s relatively robust toolkit. These games can be virtually anything; from full platformer-style levels for players to traverse, to single rooms to aimlessly walk around in.
Where the game has proven to be particularly successful, perhaps unsurprisingly, is the social aspect. Players are encouraged to make relationships with other players and share their projects, publicly and privately.
Currently, Roblox has around 50 million games for users to explore, most of them user-created. It has been reported that Roblox has over 100 million active players.
With these sorts of numbers, and minimal development costs, it was only ever a matter of time until investors wanted a slice of the pie.
The free market games hard
Roblox (RBLX in the marketplace) went public in an initial offering with shares being valued at $45 USD each. This equated to the entire company, rather impressively, being valued at $29 billion USD. It seems like a lot of money, but don’t worry, Goldman Sachs and other Wall Street institutions were involved in an advisory capacity. So you know this shit must be watertight. Right?
Now this is where the story picks up steam. Because Roblox was placed in the market as a direct listing, no new shares can be created, making them a limited quantity asset. While this doesn’t necessarily make them valuable, it can make them appear to be scarce – something frequently conflated with being valuable.
Within a single day on the market the price of a single Roblox share had risen to $69.50 USD. Meaning that in less than 24 hours, Roblox as am entity had increased in value to $45 billion USD.
This is a 54.4% increase in value. Not a bad first day out on the town, if you ask me.
We couldn't have made it without our team! Our employees shared this experience together inside @Roblox to celebrate our direct listing on the @NYSE virtual trading floor. #RobloxIPO pic.twitter.com/7ED72gU5ss
— Roblox Corp (@InsideRoblox) March 10, 2021
Interestingly, Roblox is the the first direct listing of the year. Past direct listings have included other fast rising stocks, normally those that enter the market expecting a great deal of interest, such as Spotify (SPOT), Slack Industries (WORK), and Asana (ASAN).
Currently, it appears investors may have been attracted by the type of listing just as much as they are attracted the idea of Roblox. Either way, it’s been another wacky day where a video game-related company has brought a bit of chaos and madness to the stock market – something that is starting to feel like a ‘trend’, if you pardon this games writer’s newly acquired expertise.