Roblox stock surged during the company’s public debut on Wednesday, WSJ reports.
Why It Matters: It looks like the scorching hot IPO market, stemming from the second half of 2020, has no intention of slowing down. Investors chasing tech and other buzzy stocks keep pushing the “historic boom” further and further.
- “So far this year, nearly $103 billion has been raised in IPOs, including the red-hot market for special-purpose acquisition companies, or SPACs, according to Dealogic. That far outpaces every comparable-period total on record and the full-year tally in all but three years since 1995.”
- Roblox direct listed, “an increasingly popular way for companies to go public that sidesteps the traditional IPO process.”
- Its share price increased more than 54% over the $45 predetermined reference price.
- At close, the stock sat at $69.50 and had a market cap of around $45 billion. Just for context, Roblox was valued at $29 billion in a private fundraising round a few months back.
The Next IPO Party: South Korean e-commerce firm Coupang is set to follow Roblox today. It’s going public by traditional IPO and could be the largest this year by dollars raised and valuation.
- It’s projected to be the biggest since Alibaba in 2014.
- Coupang is pricing shares at $35, which could raise more than $4 billion and lead to a roughly $63 billion valuation.
Looking Ahead: Airbnb, DoorDash, Roblox and now, Coupang — the bubble has to burst eventually, right? At some point, it will, and fears around market uncertainty motivated Roblox to postpone its IPO from December to March.
- But even when the boom comes to an end, the hype has already yielded massive returns for early investors.
See my tweet for thoughts on Roblox ($RBLX) stock.
A $35 share price values Coupang ($CPNG) at $59 billion. If we assume 80% growth for the next couple of years, that represents 2.4x forward Sales and 14.2x forward Gross Profit.
I believe JD.com ($JD) is probably the purest comparable peer and has similar Gross Margins. $JD is growing at 30% and trades at 0.9x forward Sales and 5.8x forward Gross Profit. I guess, all-in-all, the IPO price seems fair.
With $CPNG, you’d be buying 3x the growth than $JD, but also at 3x the price.