Roblox: The New Kid on the Block


There is a new kid on the block. Literally. Roblox. And it hit the stock market Wednesday, March 10, 2021 opening at $64.50 and “surged” on it’s first day of trading by going “public through a direct listing, which differs from an IPO in that shares are not backed by underwriters”.  

“Roblox (RBLX) opened strong on the New York Stock Exchange on Wednesday. Shares started trading at $64.50 each, well above their reference price of $45 set by the exchange.”

Roblox allows users to play games designed by users or create one’s own game and share that “using Roblox’s proprietary game-developing tool, Roblox Studio”. Once a user signs up they “play an infinite umber of games, chat with other users, build and share creations  – all for free”.  

“In a direct listing, current stakeholders convert their ownership into stock based on trading prices in private markets. In its latest filing, Roblox said nearly 199 million Class A shares had been registered for resale, for a total of about 388.2 million available shares. The public debut of Roblox has been anticipated since word of an IPO began circulating in October.”

“The company pivoted to plans for a direct listing from a planned IPO back in January after getting a fresh venture-capital infusion of $520 million that valued the company at $29.5 billion.”

“The main difference between these two methods of going public is that with a direct listing, the company doesn’t issue any new shares of stock. Instead, existing shares that are held by investors, promoters and employees are sold to the public. Also, no money is raised by the business executing a direct listing and there are no underwriters involved.”

But I get ahead of myself. What is Roblox and why the hoopla?

“Roblox is an online game platform and game creation system developed by Roblox Corporation. It allows users to program games and play games created by other users.”

“Roblox is free-to-play, with in-game purchases available through a virtual currency called “Robux”. As of August 2020, Roblox had over 164 million monthly active users, with it being played by over half of all children aged under 16 in the United States.”

I suspect the pandemic has increased the adolescent usage. What better way for the youth of America to take a break from zoom fatigue or the standard web based learning sites their school districts subscribe to and log onto a Roblox game rather than IXL or BrainPop? 

“Roblox saw usage surge 40% in March with kids forced to find productive activities while at home.”

“In addition to highlighting the social functions of its games, Roblox has been rolling out features to help educators incorporate the gaming tools into their remote learning plans.”

“It’s a space where kids can do unstructured play, which is super valuable,” said Donato, who joined the company in 2016 from Nextdoor. “Now everyone is locked at home, and this thing we’ve been focused on is even in more demand.”

Apparently one educator in Singapore felt the same way about giving students something out of the b[l]ox, no pun intended.

“Still, teachers of old-school subjects are experimenting too. Philip Williams, a librarian at a Singapore school, has used games on Roblox, a popular platform for the preteen set, to teach physics concepts.”

“The students had just been making Rube Goldberg machines when we went into covid lockdown,” Williams says. “It was a natural connection to explore the Roblox physics engine by creating a chain-reaction simulation.”

“The experiment was so successful that Williams figured he’d keep using Roblox to teach into the new school year, saying one big advantage is that the kids look forward to class.”

So what can a kid learn from Roblox? Are there any redeeming qualities to playing the Roblox video games? It seems so! Roblox’s mission is to “bring people together through play” through the use of technology and the power of imagination. Sounds like a plan to me!

“Roblox is an immersive educational tool where the opportunities for creativity and imagination are limitless. We offer free resources to teach students of all ages real coding, game design, digital civility, and entrepreneurial skills.”

“Roblox’s creation tools and educational content are provided free-of-charge. As one of the fastest-growing resources for educators, Roblox allows anyone to build and publish their own games while learning real 21st century skills. Join our community of educators and ignite learning for millions of students worldwide.”

“Anyone can build a game on Roblox. It doesn’t matter if you’re new to coding or you’ve never designed your own virtual world. With a little imagination and the right tools, you’re already well on your way to taking the first leap into game development. Click below to start building your own worlds on Roblox today!”

Roblux also offers kids the opportunity to learn about money and the art of making and using money: both in game currency Robux – which can be pruchased using a debit or credit card  – and real money. There are a variety of ways to earn money playing Roblox and they can range from charging people Robux to gain access to the games you create (like a one time entry fee), charging games passes, exchanging Robux for real money, trading items inside the game world, buying them, or having them donated to you. ttps://

 “You use them for a range of things, including special outfits or animations for your avatar, unique abilities in games, weapons, and other objects.

Is Roblox ethical and safe? For the most part. It is age appropriate for tweens and parents can attend to the privacy settings and be cognizant of predatory online behavior.

“Because all of its content is user-generated, kids can be exposed to a range of material. Much of it is age-appropriate for tweens and teens. Some of it is just annoying, such as advertising and incessant demands to buy “Robux,” Roblox’s in-game currency. And some of it is very concerning, such as predatory behavior and sexually explicit user forums.”

“However, with careful attention to red flags, privacy settings, and other safety precautions, kids can have a rich and thrilling experience playing Roblox. But your understanding of how it works, and how your kids can use it safely, is key.”

“Roblox offers account controls that let parents restrict how kids can interact on the site and the types of games they can play. You can control whether kids can be contacted, who can message or chat with them, and a few other things in the contact settings.”

So from parents hosting virtual birthday parties on Roblox to camp courses on designing Roblox games to tweens following each other around in a virutal environment and making friends, adopting pets, going to virtual amusement parts especially when they can’t do that in real life at the moment what is the outlook for Roblox now that the company has gone public? Like most video games Roblux has been a babysitter in the room, moreso during the pandemic.

“”Roblox is a bit of a substitute babysitter when some parents need a break at home,” says P.J. McNealy, CEO of Digital World Research who teaches at Boston College. He says Roblox has benefitted during COVID by having a captive audience. “”

But is there life after the pandemic and is there life past providing relief for harried parents? 

“McNealy says the company started with a younger demographic and is growing. Going public, he says, will allow Roblox to build a digital empire, beyond gaming. “This money will either give them an opportunity to build more content for the for the platform or to go to adjacent platforms like music or partnering with Spotify or movie service,” he says. “That’s where this is going to go.””

Since the pandemic Roblox has seen an influx of older people on the site. The question is how to keep the adults interested once people come out from indoor isolation. The company’s CEO, David Baszucki, laid out his vision for the company “including making movies with Roblox content, and creating a “universal translator” for people around the globe to gather in a collective virtual space”.

“In early January, Roblox announced it had already raised $535 million dollars for what it calls its “human experience platform.” It hosts games created by players themselves.”

 This “metaverse” as Roblox describes itself is still not profitable and will be under more scrutiny of the platform because of its young user base.

“Roblox is still not profitable. It lost more than $253 million in 2020, up from a loss or about $71 million a year earlier.”

“Baszucki said the company will look to generate more sales from advertising. He stressed that it will be organic. Users, for example, can pay to wear Nike shoes in the game as opposed to seeing big Air Jordan billboards in Roblox.”

If Roblox follows the trajectory of other fearless companies who came before then the future looks bright.

“Roblox joins a growing list of so-called unicorn companies that have gone public in the past few months and soared, such as Bumble, Poshmark, Airbnb and DoorDash. Gaming software firm Unity also went public last September and its stock has nearly doubled since then.”

This writer looks forward to watching the new kid on the ‘blox’ dazzle us as ‘he’ explores new virtual worlds so that when it comes to the real world Roblox and their investors can truly  “live long and prosper”.

Author: Sherri Margolin (Dark Matters)

Disclaimer: Absolutely nothing you read in here should be taken as investment advice. The discussion of securities and ideas is never to be considered a recommendation to buy or sell any.  Always do your own due diligence.

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