While the pandemic upset Airbnb’s plans to go public via direct listing, Roblox is taking up the mantle in 2021.
On Wednesday, the gaming company popular among teens said it would not go public via a traditional IPO, but through a direct listing—a method that companies have generally used to sell existing shares rather than raise new funds. The direct listing came to the fore in 2018, when Spotify sought to tackle the first-day stock price pop that often comes with an IPO and elicits criticism that money is left on the table for the companies themselves.
Roblox too saw the soaring stock prices of DoorDash and Airbnb at their December listings—each of which doubled in their first day of trading. Now it is following the small handful of companies that have gone public through the still relatively untested direct listing, including Spotify, Slack, Asana, and Palantir.
While it’s not raising funds via an IPO, Roblox has already started the new year with a bang. The gaming company said it has raised $520 million in Series H funding in private markets from Altimeter Capital and Dragoneer Investment Group, valuing the company at around $29.5 billion. It was last valued at about $4 billion in early 2020.
Still, the lines between the direct listing and IPO have blurred in recent months. The Securities and Exchange Commission allowed for direct listings to raise new funding late last year. While Roblox is not taking advantage of the new changes, importantly, the direct listing also allows shareholders including early employees to sell their shares with no lock-up period. A restriction is typically placed on traditional IPOs that prohibits some shareholders from cashing out on shares for months following a public debut.
SURVIVING AN E-COMMERCE REVOLUTION: As online sales are increasingly taking over foot traffic to physical stores, consumer-facing companies are hitting back by increasingly focusing on their in-store capabilities. Pet stores are honing in on health care and day cares for the fuzzy friends while Walgreens Boots Alliance is seeking to become not only a drug store but also a primary-care clinic. Last year, it struck a deal with VillageMD to open clinics at its locations.
In the latest sign of this trend, AmerisourceBergen agreed to acquire Walgreens Boots Alliance’s distribution business for $6.5 billion as the latter faces competition from Amazon’s new pharmacy business and CVS Health’s recent combination with insurer Aetna.