- Roblox has plans to go public through a direct listing next month

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

Roblox previously had planned to go public the usual way, allowing Wall Street investment bankers to find buyers for early blocks of shares before opening a stock to investors in the broader market. But Roblox halted those plans in December after DoorDash and Airbnb held traditional IPOs and in doing so left huge sums on the table as share prices soared once the broader market had access to them.

"The multitude of other entertainment options, online gaming, and other interactive experiences is high, making it difficult to retain users who are dissatisfied with our platform and seek other entertainment options," Roblox writes. "Moreover, the majority of our users are under the age of 13. This demographic may be less brand loyal and more likely to follow trends, including viral trends, than other demographics."

The online gaming company announced the switch, confirming an earlier Bloomberg report. Roblox also said that it raised $520 million through a series H private placement that valued it at $29.5 billion, according to a separate statement. The round was led by Altimeter Capital and Dragoneer Investment Group.

The funding will allow Roblox to go public without having to raise capital in an IPO. While the U.S. Securities and Exchange Commission has approved a New York Stock Exchange proposal to allow companies to raise capital in a hybrid type of direct listing, no company has tested that model yet.

Under the direct listing, the NYSE will set a reference price for the stock the night before Roblox’s debut, but no shares will be traded 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 broader market under the ticker symbol “RBLX.”

Direct listings shoulder firms and early investors with certain risks but can be streamlined and straightforward compared to the process of holding a traditional initial public offering. The system of holding direct offerings has the potential to pose a significant threat to traditional, and very lucrative, investment-banking practices.

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