After shelving an initial public offering in December, video game developer Roblox is slated to join the ranks of the listed companies in a direct listing of shares on March 10. The shares will trade under the RBLX stock ticker on the New York Stock Exchange.
The online gaming platform boasts tens of millions of games played by 33 million daily active users, a base that doubled last year as the world spent more time at home.
Unlike mainstream rivals like Electronic Arts (NASDAQ:EA) and Take-Two Interactive Software (NASDAQ:TTWO), Roblox outsources game development to its players. This cohort, mostly teenagers and preteens, creates the games, develops a following and earns a majority piece of the related revenue streams that flow from the title.
After the company reached a $29.5 billion valuation in a recent funding round, Roblox shares could price at $45 a piece when they come to market. The earlier plan for an IPO fell apart after difficulties in determining the right price for the gaming platform’s shares, coming in the wake of strong market debuts by Airbnb (NASDAQ:ABNB) and DoorDash (NYSE:DASH).
RBLX Stock Listing Avoids Traditional Route
By taking RBLX stock direct to market and avoiding the traditional IPO route, management is following in the footsteps of two other disruptive firms, Spotify Technology (NYSE:SPOT) and Slack Technologies (NYSE:WORK).
The RBLX direct move has an advantage over those two transactions. What is that? A move in December by the U.S. Securities and Exchange Commission (SEC) changed the rules on direct listings, allowing companies to raise cash by auctioning new shares in parallel with sales by current shareholders.
Because Roblox recently raised money in a Series H round, and its capital needs would seem pretty much in hand for now, the direct listing is more likely a way to afford those current shareholders a liquidity opportunity. That could create some post-listing dip opportunities for investors.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.