Roblox toys are displayed at a toy fair in London.
Leon Neal/Getty Images
Roblox, which is going public Wednesday via a direct listing, is due to give investors an indication of the price the shares might sell for later Tuesday.
The videogaming platform will trade on the New York Stock Exchange under the symbol RBLX. About 199 million Roblox shares will go on the market, but unlike in a traditional IPO, the company isn’t raising new capital via the offering. Instead, holders will sell stock they already own.
The company also hasn’t set a price for the stock to be sold in the offering. Instead, the New York Stock Exchange will work with the company’s financial advisors to set a so-called reference price, meant to be a guidepost that informs the public of recent private trading activity, according to a person familiar with the situation. The NYSE will issue the reference price later Tuesday.
Direct listings aren’t new but have gained attention of late. Roblox will be the fifth company to go public using this method.
Palantir Technologies (ticker: PLTR), Asana (ASAN), Slack Technologies (WORK), and Spotify Technology (SPOT) all used direct listings to make their public equity-market debuts. Companies typically don’t raise capital via direct listings, although in December, the Securities and Exchange Commission approved a rule change proposed by the NYSE that allows a company to do so.
Roblox won’t receive any proceeds from shareholders who sell their stock. Goldman Sachs, Morgan Stanley, and Bank of America are advising Roblox on the deal.
When Spotify went public on the NYSE in 2018, its reference price was the level of the last private secondary trades. In Slack’s 2019 listing, the reference point was closely informed by the volume-weighted average price of the recent secondary trading activity, but it wasn’t the exact average, the person said.
Unlike the price range set by the underwriters of a traditional IPO—usually a reasonable indicator of the offer price—the reference price isn’t particularly useful as a gauge of where a directly listed stock will trade.
Both Palantir and Asana went public in September using direct listings. Palantir’s reference price was $7.25, but the stock opened on Sept. 30 at $10, hit a high of $11.42, and closed at $9.50. While Asana’s reference price was $21, it opened at $27, peaked at $29.96, and ended at $28.80.
Founded in 2004, Roblox hosts child-friendly games focused on digital characters resembling Lego blocks. An average of 37.1 million people come to Roblox daily to play games.
Roblox is not profitable. Losses widened to $253.3 million for 2020, compared with $71 million in 2019. Revenue rose nearly 82%, to $923.9 million. David Baszucki, Roblox’s co-founder, president, and CEO, has 70.1% of the total voting power, the prospectus said.
Write to Luisa Beltran at [email protected]
