Roblox expects direct listing on the NYSE in February

Roblox said on Friday in an updated prospectus that it plans to make a direct listing public next month after the online gaming company postponed its debut in December.

Earlier this week, Roblox reported that it raised $ 520 million in a round of private financing before a direct listing. By following this path to public markets instead of a traditional IPO, Roblox is following Spotify, Slack, Palantir and Asana, avoiding a stock sale and instead allowing existing shareholders and employees to sell shares to new investors immediately .

The last round of financing, at $ 45 per share, valued Roblox at $ 29.5 billion. In the updated case, Roblox said that an independent valuation report in December put the stock at $ 41.52 each. By raising some money before going public, Roblox was able to increase its balance sheet and preserve its ability to bring in more capital through a secondary sale later this year.

According to the direct listing, the NYSE will set a reference price for the shares the night before Roblox’s launch, but no shares will be traded at that price. In the morning, market makers will combine buyers and sellers to determine the opening price and the shares will be available for the broader market under the symbol “RBLX”.

Roblox was considering a more traditional IPO, but presented its plans last month after DoorDash and Airbnb emerged on consecutive days, leading to concerns that the company risked leaving too much money on the table.

“Due to market volatility and the performance of other initial public offerings recently subscribed, we have chosen to present this prospectus as an amendment to the registration statement and seek a direct listing to allow the determination of the public opening price of our Class A common shares in the NYSE for purchase and sale orders collected by the NYSE from brokerages, “said Roblox in the prospectus.

As Roblox is not conducting an IPO, it no longer requires subscribers. The company said Goldman Sachs and Morgan Stanley will remain as financial advisers, but JPMorgan, Bank of America and RBC Capital Markets have been removed from the process.

Roblox, which launched its service for the first time in 2006, is reaching the public market after a year of dramatic growth as children, who were forced to stay home during the pandemic, spent more time playing.

Third quarter revenue jumped 91% over the previous year, to $ 242.2 million. Daily active users almost doubled in the period ended in September to 36.2 million and “engaged hours” more than doubled to 8.7 billion.

In the Roblox app, users create an avatar that can move between millions of different games. They are free to play, but users buy a virtual currency called Robux for advanced features or to build their character.

The games are created by external developers, who share the revenue with Roblox. The company said in the updated file that in the first three quarters of 2020, the platform had about 3,800 developers, who earned $ 215 million. This is more than a year earlier, when 2,400 developers earned $ 72.2 million.

While many game creators profit from real-world currency, “some choose to reinvest their Robux in developer tools, promote their experiences through our internal ad network, or spend Robux as any other user would,” said the company .

– Leslie Picker from CNBC contributed to this report.

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