Roblox expects a direct listing on NYSE in February

Roblox said in an updated prospectus on Friday that it plans to go public via direct listing next month, after the online game company delayed its debut in December.

Earlier this week, Roblox announced 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 IPO, Roblox follows Spotify, Slack, Palantir and Asana, bypasses a stock sale and instead lets existing stakeholders and employees sell shares directly to new investors.

The latest round of funding, at $ 45 a share, valued Roblox at $ 29.5 billion. In the updated filing, Roblox said an independent valuation report in December placed the stock at $ 41.52 each. Raising some money before going public allowed Roblox to fill his balance sheet and maintain the ability to raise more capital through a secondary sale later this year.

Under the direct listing, the NYSE sets a reference price for the stock on the night before Roblox’s debut, but no stock is trading at that price. In the morning, the market makers will match buyers and sellers to determine the opening price and the stock will be available to the wider market under the ticker symbol “RBLX.”

Roblox considered a more traditional IPO, but presented its plans last month after DoorDash and Airbnb surfaced on consecutive days, sparking concerns that the company was at risk of putting too much money on the table.

“Due to market volatility and the performance of other recent underwritten IPOs, we have chosen to file this prospectus as an amendment to the registration statement and pursue a direct listing to determine the opening price of our A common stock on the NYSE through buy and sell orders collected by the NYSE from broker-dealers, ”Roblox said in the prospectus.

Since it doesn’t do an IPO, Roblox no longer needs insurers. The company said Goldman Sachs and Morgan Stanley will remain on as financial advisors, but JPMorgan, Bank of America and RBC Capital Markets have been removed from the filing.

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

Third quarter sales were up 91% from a year earlier to $ 242.2 million. The number of daily active users nearly doubled to 36.2 million over the period ending September, and the number of ‘engaged hours’ more than doubled to 8.7 billion.

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

The games are made by third-party developers, who share the revenue with Roblox. The company said in the updated filing that in the first three quarters of 2020, the platform had approximately 3,800 developers making $ 215 million. That’s more than the year before, when 2,400 developers made $ 72.2 million.

While many game makers pay out money in real currency, “some choose to reinvest their Robux in developer tools, promote their experiences through our internal ad network, or release the Robux as any other user would,” the company said.

– CNBC’s Leslie Picker contributed to this report.

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