After a delay, Roblox intends to go public through a direct listing on March 10, WSJ reports.
Why It Matters: The video game company initially planned to IPO last year but backtracked after Airbnb and DoorDash’s strong debuts skewed its ability to find the right price. In January, Roblox pivoted to a direct listing but hit a wall when the SEC “requested changes to how it accounted for the sale of virtual currency called Robux.” The issue has since been resolved, according to Roblox.
- It will trade on the New York Stock Exchange under the ticker “RBLX.”
Numbers To Consider:
- Roblox has said it had raised more than $500 million at a valuation of $29.5 billion. It’s a sevenfold improvement from a funding round the year before.
- It had 33 million daily active users last year, an increase from around 18 million the year before.
- Roblox will report numbers at its virtual investor day Friday. Last year, the company said revenue rose 82% to $923.9 million, bookings doubled to around $1.9 billion and operating cash flow ticked up to $524 million from $99.2 million in 2019.
- The company is not profitable and posted a net loss of $253.3 million in 2020 (up from $71 million in 2019).
“Home Depot Inc. logged strong sales growth year over year for the November-to-January quarter and raised its dividend, but the company’s finance chief said that the trend could flatten this year as the company faces comparisons from its robust 2020 results,” WSJ writes.
- Quarterly Revenue: $32.26 Billion (+25%)
- Quarterly Earnings: $2.86 Billion (+15%)
“TV firm Discovery Inc.’s net profit fell by more than half in the fourth quarter on flat revenue,” The Information writes.
- Revenue: $2.8 Billion
- Global Paying Subscribers (Streaming): 11 Million
“The RealReal, an online luxury consignment store where customers buy and sell second hand luxury goods, on Monday reported a 10% year over year drop in fourth quarter revenue. Its net loss more than doubled to $53 million in the same period. The result continues a trend from the second and third quarters of 2020,” The Information writes.
Roblox ($RBLX) did $923 billion in Revenue and $683 billion in Gross Profit in 2020. Assuming 45% growth in 2020, a $29.5 billion valuation represents 30x forward Gross Profit for $RBLX stock, which seems fair enough. My concern would be what happens to Roblox revenues as the pandemic subsides.
$HD stock is down 6% today on earnings, presumably because the market was expecting strong growth to continue through 2021 and 2022, whereas management is warning growth could flatten as compared to inflated pandemic revenues. I’m not sure what I think, as I do believe in a continuation in the housing boom going forward.
Discovery ($DISCA) stock is down 8% on flat revenue growth.