Roblox, which had delayed its initial public offering, has set a date for a direct listing of its shares.
The video game company will now go public “around March 10,” according to a revised prospectus released Monday. Roblox is looking 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 the roughly 199 million shares would be “determined by buy and sell orders compiled by the NYSE from brokers.”
Roblox will be the fifth company to go public through a direct listing. Palantir Technologies (PLTR), Asana (ASAN), Slack Technologies (WORK) and Spotify Technology (SPOT) used a direct listing when they debuted on the public equity markets.
Roblox will trade on the New York Stock Exchange under the symbol RBLX. Goldman Sachs, Morgan Stanley and Bank of America are acting as financial advisers on the deal.
Founded in 2004, Roblox is home to children’s games focused on digital characters that resemble Lego blocks. An average of 37.1 million people come to Roblox daily to play.
The company is not profitable. Losses increased to $ 253.3 million for the year ended December 31, compared to $ 71 million in losses for the same period in 2019. Revenues increased nearly 82%, to $ 923.9 million, for the December 31 period. It has 960 full-time employees. David Baszucki, co-founder, president and CEO of Roblox, has a total voting power of 70.1%, according to the prospectus.
Roblox’s path to a direct listing wasn’t easy. In November, the company initially went public through a traditional initial public offering. Then, in December, it delayed the offer following strong debuts from
(DASH) made it too difficult to determine the correct price of the stock.
In January, Roblox changed its mind about a traditional initial public offering and decided to go public through a direct listing.
The Roblox switch came after the Securities and Exchange Commission approved a rule change from the New York Stock Exchange that allowed direct listings in December. Companies using direct land listings can now sell new shares and raise fresh capital in a single large transaction directly on the exchange with no subscribers.
Direct listings aim to level the playing field for investors. The price is set 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 advisors, Goldman, Morgan and BofA.
This is different from traditional IPOs, where underwriters set the offer price. This sometimes leads to big blowouts on the first day of trading.
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