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The video game platform Roblox plans to go public through a direct list.
AFP via Getty Images
Roblox, which delayed its initial public offering, set a date for the direct listing of its shares.
The video game company is now going public “on or around March 10,” according to an amended prospectus presented on Monday. Roblox is trying to sell 198,917,280 shares, but has not specified a price. In January, the company sold nearly 12 million convertible preferred shares in a private placement at $ 45 a share. Renaissance Capital said a listing at that price would value the company at more than $ 29 billion. Roblox said in the prospectus that the opening price of about 199 million shares would be “determined by the buy and sell orders collected by the NYSE from brokerages”.
Roblox will be the fifth company to go public using a direct listing. Palantir Technologies (PLTR), Asana (ASAN), Slack Technologies (WORK) and Spotify Technology (SPOT) used a direct listing when they made their debut in the public stock markets.
Roblox will be traded on the New York Stock Exchange under the ticker RBLX. Goldman Sachs, Morgan Stanley and Bank of America are serving as financial advisers in the business.
Founded in 2004, Roblox hosts games for children focused on digital characters that resemble Lego blocks. An average of 37.1 million people go to Roblox daily to play.
The company is not profitable. Losses increased to $ 253.3 million in the year ended December 31, compared to $ 71 million in losses in the same period in 2019. Revenue increased by almost 82% to $ 923.9 million in the period December 31. It has 960 full-time employees. David Baszucki, co-founder, president and CEO of Roblox, has 70.1% of the total voting power, the prospectus said.
Roblox’s path to a direct listing was not straightforward. In November, the company initially went public using a traditional initial public offering. Then, in December, it delayed the offer after the strong debut of
Airbnb
(ABNB) and
DoorDash
(DASH) made it very difficult to determine the right price for the shares.
In January, Roblox changed its mind about a traditional IPO, opting to go public through a direct listing.
The Roblox exchange came after the Securities and Exchange Commission approved a New York Stock Exchange rule change that allowed direct listings in December. Companies using direct listings can now sell new shares and raise new capital in a single large transaction directly on the stock exchange, with no underwriters.
Direct listings aim to level the playing field for investors. The price is defined by the orders received by the exchange. For example, a designated market maker will determine Roblox’s public opening price based on the buy and sell orders that the NYSE collects from brokers. The market maker will decide the opening price of Roblox in consultation with its financial advisers, Goldman, Morgan and BofA.
This is different from traditional IPOs, in which subscribers price the offer. This sometimes leads to big pops during the first day of trading.
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