Roblox expects direct listing on NYSE in February

Roblox said in an updated prospectus on Friday that it plans to give a direct listing next month, after the online gaming business delayed its debut in December.

Earlier this week, Roblox announced that it had raised $ 520 million in a private funding round prior to a direct listing. By taking this route to the public markets instead of a traditional stock market, Roblox follows Spotify, Slack, Palantir and Asana, to circumvent a stock sale and instead enable existing stakeholders and employees to immediately buy shares from new investors sell.

The latest round of financing, at $ 45 per share, valued Roblox at $ 29.5 billion. In the updated documentation, Roblox said that an independent valuation report in December raised the shares to $ 41.52 each. By raising some money before going public, Roblox was able to draw up its balance sheet and retain the ability to raise more capital through a secondary sale later this year.

Under the direct listing, the NYSE will determine a reference price for the stock the night before Roblox’s debut, but no shares will be traded at the price. This morning, the market makers will match buyers and sellers to determine the opening price, and the stock will be available for the broader market under the symbol “RBLX”.

Roblox was considering a more traditional IPO, but put its plans on the table last month after DoorDash and Airbnb surfaced on consecutive days, raising concerns that the company would leave too much money on the table.

“Due to market volatility and the performance of other recent endorsed initial public offerings, we have opted to submit this prospectus as an amendment to the registration statement and to seek a direct listing to raise the opening price of our class. “Determine A shares on the NYSE by buying and selling orders the NYSE has collected from brokers,” Roblox said in the prospectus.

Because he does not do an IPO, Roblox no longer needs underwriters. According to the company, Goldman Sachs and Morgan Stanley will remain as financial advisers, but JPMorgan, Bank of America and RBC Capital Markets have been removed.

Roblox, which first released its service in 2006, is reaching the public market after a year of dramatic growth as children, who had to stay home during the pandemic spent more time on games.

Revenue in the third quarter increased 91% from a year earlier to $ 242.2 million. Daily active users almost doubled to 36.2 million at the end of September and ‘worked hours’ more than doubled to 8.7 billion.

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

The games are created by outside developers, who share the revenue with Roblox. The company said in the updated documentation that in the first three quarters of 2020, the platform had approximately 3,800 developers who earned $ 215 million. This is better than a year ago, when 2400 developers earned $ 72.2 million.

While many game creators make money in real world money, “some choose to reinvest their Robux in developer tools, enhance their experiences through our in-house advertising network, or spend the Robux like any other user would,” the company said.

– Leslie Picker of CNBC contributed to this report.

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