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The video game platform Roblox intends to be announced through a direct listing.
AFP via Getty Images
Roblox, which has postponed its initial public offering, has set a date for immediate listing of its shares.
The videogame company is now being announced ‘on about March 10’, according to an amended prospectus submitted on Monday. Roblox wants to sell 198,917,280 shares but has not set a price. In January, the company sold nearly 12 million shares of convertible preference shares in a private placement at $ 45 per share. Renaissance Capital said a listing at that price would value the company more than $ 29 billion. Roblox said in the prospectus that the opening price of the approximately 199 million shares “will be determined by buy and sell orders collected by the NYSE from broker-dealers.”
Roblox will be the fifth company to make a direct listing. Palantir Technologies (PLTR), Asana (ASAN), Slack Technologies (WORK) and Spotify Technology (SPOT) all used a direct listing when they made their debates on the public stock market.
Roblox will trade on the New York Stock Exchange under the tick RBLX. Goldman Sachs, Morgan Stanley and Bank of America act as financial advisers on the transaction.
Roblox was founded in 2004 and offers kid-friendly games that focus on digital characters that look like Lego blocks. An average of 37.1 million people come to Roblox every day to play games.
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. Revenue increased nearly 82%, to $ 923.9 million, for December 31. It has 960 full-time employees. The prospectus said David Baszucki, co-founder, president and CEO of Roblox, has 70.1% of the total voting rights.
Roblox’s path to a direct listing was not simple. In November, the company initially applied to make a traditional initial public offering. Then, in December, it delayed supply after the strong debut of
Airbnb
(ABNB) and
DoorDash
(DASH) made it too difficult to determine the right price for shares.
Roblox changed its mind about a traditional exchange in January, preferring to make a direct listing.
The conversion of Roblox took place after the Securities and Exchange Commission approved a rule change from the New York Stock Exchange that allowed direct listings in December. Companies that use direct listings can now sell new shares and raise fresh capital in a single large transaction directly on the stock exchange without underwriters.
Direct listings are aimed at leveling the playing field for investors. The price is determined by the orders received by the exchange. A designated market maker, for example, will determine the opening price of Roblox based on buy and sell orders that the NYSE collects from broker-dealers. The marketer will determine Roblox’s opening price in consultation with its financial advisers, Goldman, Morgan and BofA.
This is different from traditional IPOs, where underwriters determine the price of the offer. This sometimes results in a big doll during the first trading day.
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