Roblox has filed confidentially with regulators for an IPO

In Roblox, a hugely popular kids gaming platform, users can build their own games and virtual worlds using Lego-like bricks. Its creator may take a similar do-it-yourself approach by joining the US stock market through a direct listing. The company’s plans to go public are well timed, given the surge in gaming triggered by the pandemic.

Roblox was already a video gaming sensation before Covid-19. It boasted 115m monthly active users in February. That number swelled to 150m by the end of July, as millions of children who were stuck at home flocked to the site. That was enough to make it one of the most popular games in the world. Minecraft, which was acquired by Microsoft for $2.5bn in 2014, has about 131m monthly active users. 

Last month, California-based Roblox filed confidentially with regulators for an initial public offering. No details are available, including whether the group will sell some shares or simply list them. Roblox is reportedly aiming for a valuation as high as $8bn with its offering. That would be twice what it was valued at in February. 

That may not be unreasonable. Unlike game developers, whose fortunes are tied to one or two blockbuster titles (think Angry Birds and its creator Rovio Entertainment), Roblox’s appeal lies in its function as a games engine. It is an online hub where users create games and share them. In this way, Roblox resembles YouTube — it gives people tools to create digital content and a place to share it. The company claims two-thirds of all US children of nine to 12 years old use the platform.

Interest in game engines has grown during the pandemic. Sony bought a 1.4 per cent stake in Epic Games earlier this summer at a near $18bn valuation. While Epic is best known for its blockbuster Fortnite game, it is also the creator of Unreal Engine, which creates design tools for developers. Unity Software, the other leading platform, has jumped 49 per cent in value since it went public in September. Roblox can expect a similar sizzle from its IPO if it is priced sensibly.

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