Much like anything else you can do at home, on the phone, while sitting on the couch (cough, shopping, cough) the gaming industry got an enormous boost in 2020.
One of the biggest beneficiaries of a pandemic that took kids out of the classroom and locked them in their houses is a company called, Roblox (RBLX). The kids gaming app surged in popularity last year, with daily active users jumping 85% year-over-year to 32.6 million and revenue jumping 82% to $923.9 million.
Sitting at one of the top-grossing apps across both Apple (AAPL) and Google (GOOGL) devices, Roblox allows kids to socialize virtually, and create avatars they can move between millions of games on the service, navigating theme parks, attending concerts, adopting virtual pets, fighting enemies with their friends, and playing action games, all while staying in touch using its popular text chat feature.
And on Wednesday, the gaming company made its stock market debut on the New York Stock Exchange through a direct listing, with shares closing at $64.50 apiece, a 43% increase from a private financing round in January. Roblox’s impressive inaugural trading day gave the company a market cap of $38.26 billion.
While it all looks good on paper, the reality is Roblox’s net loss widened to $253.3 million from $71 million in 2019 as the company nearly tripled the money it had to pay to developers through its revenue sharing program. In all, more than 1,250 developers made at least $10,000 last year through virtual sales in their Roblox games.
Like many other hot companies and IPOs, Roblox is an exciting and trendy story, but investors would be wise to look under the hood, before diving in headfirst.