Written by Robert Thompson III | 2/17/21
First off, every day, more than 36 million people around the globe log into Roblox to do a variety of activities, from attending a concert to skiing with friends and designing their own clothing lines. The platform hosts users created games of multiple genres coded in the programming language “Lua”. In fact, Roblox has over 150 million monthly users. Surprisingly, Roblox’s revenue in the third quarter jumped 91% from a year earlier to $242.2 million. Roblox allows users to create an avatar that they can move across titles. Although, most games are free to play there are some that cost robux to play like bloxburg. Roblox has its own currency called robux that you use to buy clothes or services in the game.
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More importantly, Roblox said on Wednesday that it raised $520 million in a private financing round. And announced separately that it will soon go public through a direct listing. A Direct Public Offering (DPO), also known as a direct listing. Is a way for companies to become publicly traded without a bank-backed IPO. It’s one of several ways companies are exploring to reach the public market. As an alternative to the traditional IPO. Roblox’s announcement comes just about two weeks after the SEC approved a rule allowing companies to raise primary capital at the same time as their market listing. Roblox, however, is raising capital before its listing. Roblox said it plans to file a registration statement with the SEC for a direct listing, but didn’t provide a timeframe.
Should You Invest in the Roblox DPO?
The company behind the popular Roblox video game platform is planning to go public soon. Originally scheduled for the holidays, the Direct Public Offering(DPO) should now hit the stock market early this year with a market value of roughly $8 billion. Furthermore, anybody can build games with the Roblox system, where the games themselves are free to play. But many designers are charging fees for in-game items, features, and other assets. These fees are paid in the form of Robux, an in-game currency that can be converted back into real-world dollars. The company generates its revenue from the direct sale of Robux to users. Successful developers can earn serious money by cashing in their virtual boatloads of incoming Robux. The company doesn’t recognize Robux sales as revenue until the in-game buyer either spends it or converts it into actual cash.
Therefore, Roblox recognizes Robux sales over the average lifetime of paying users, which currently works out to roughly 23 months. The company is experiencing heavy bottom-line losses due to the delayed revenue recognition. However, It has a free cash flow clocked in at $293 million across the first three quarters of 2020. This combination of strong cash profits and much lower taxable income is a highly effective tax strategy. On the contrary, Low or negative earnings can be a problem. When paired with great cash profits, they can also be a sign of a financial management team. That knows how to take every tax deduction in the book. Furthermore, there’s no telling exactly how expensive Roblox stock will be by the end of the first trading day.
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We don’t even have a firm DPO date yet, nor a final asking price for the new stock. All things considered, I can see why many investors are excited about Roblox’s upcoming IPO.
Roblox Growth Over The Years
Firstly, the beta version of Roblox was created by David Baszucki and Erik Cassel in 2004. And was originally under the name DynaBlocks. Secondly, Baszucki started testing the first demos that year. Therefore, In 2005, the company changed its name to Roblox. It officially launched in 2006. In , March 2007, Roblox became compliant with COPPA, however with the addition of safe chat, a change that limited the communication ability of users under the age of thirteen by restricting them to selecting predefined messages from a menu. In August, Roblox applied server improvements and released a premium membership service named “Builders Club”. Therefore, This paid membership feature was rebranded as Roblox Premium in September 2019.
In December 2011, Roblox held their first Hack Week, an annual event where Roblox developers work on outside-the-box ideas. Usually for new developments to present to the company. At October 1, 2013, Roblox released its Developer Exchange program, allowing developers to exchange Robux. Typically earned from their games into real-world currencies. On May 31, 2015, a feature called ‘Smooth Terrain’ was added, increasing the graphical fidelity of the terrain and changing the physics engine from a block-oriented style to a smoother and more realistic style. However, On November 20, Roblox was launched on Xbox One, with an initial selection of 15 games chosen by Roblox staff. New Roblox games for the Xbox One have to go through an approval process, and are subject to the Entertainment Software Ratings Board standards.
Conclusion
In conclusion, Roblox is just one amazing company. It’s growth rate is outstanding to look at. It started with no players and only three games, now it has thousands of games and over 36 million daily players. If you want Rob the Watergod to build your portfolio then email us at info@Thompsonempire.com.
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