How to Buy Into the Roblox Stock IPO

Roblox Technologies, a gaming and programming platform with a February 2020 valuation of $4 billion, is going public. The platform is free to log onto, but in-app purchasing and programming costs give Roblox a hearty and consistent revenue. The company may double its valuation by the time it goes public. If you want to get in on the action, here’s how to buy the Roblox stock IPO.

Where to buy the Roblox stock IPO

IPOs that use a firm agreement have underwriters who back the deal, price shares, and sell them on behalf of the company. However, there’s an alternative route where underwriters don’t determine the stock’s pricing or sell new shares — direct listings.

Article continues below advertisement

Since experts say that Roblox could choose a direct listing (though they have yet to confirm or deny, according to Reuters), there’s an important distinction.

Article continues below advertisement

In a direct listing, existing shareholders use the secondary market (where preferred investors trade) to price the stock. These securities eventually make it to the general public on a certain index.

Article continues below advertisement

Since the Roblox IPO is confidential, we don’t know who the underwriter is. Your best bet is to use an app like Robinhood, Betterment, or Wealthfront.

Should you buy Roblox stock when it goes public?

Since the start of the COVID-19 pandemic, the demand for video games has gone through the roof. In fact, the second quarter experienced a 30 percent increase in consumer sales compared to the same quarter last year. Overall, consumer spending in the sector hit $11.6 billion for the quarter, which is a record high.

Article continues below advertisement

With the industry’s stellar performance, it makes sense that Roblox would want to cash in on a thriving market. However, the company isn’t alone. Recently, AppLovin announced its own IPO, which may come as early as January 2021.

Whatever the case, Roblox stock could be an interesting IPO investment, even though there’s added risk associated with investing in a newly public ticker. Historically, IPOs have a tendency to start high before dipping down (also known as being overpriced), but a direct listing may make the pricing more transparent.

Latest posts