According to sources familiar with the matter at hand, Roblox Corporation is working with investment banks for its potential market debut in the United State early next year, which could see the online gaming platform double its recent $4 billion valuation.
Demand for video games has surged in the United States with consumers seeking home entertainment after being forced to live under coronavirus-induced lockdown measures, which are necessary to curb the spread of the COVID-19 disease.
According to research firm NPD Group, U.S. consumer spending on video gaming hit a record $11.6 billion during the second quarter, up by 30% compared to the same period a year ago.
Roblox is weighing its options on whether to go public through the traditional route of an initial public offering or a direct listing, said sources.
Plans are subject to market conditions, warned sources.
Sources have preferred the cover of anonymity given that the plans are private.
Roblox declined comment.
Incidentally in a direct listing, new shares are not sold and underwriters do not weigh in on the pricing, unlike in an IPO. By not selling new shares, the ownership of the company is not diluted for existing shareholders unlike a public listing which allows current investors to sell shares easily.
Direct listings are relatively rare.
Founded in 2004, San Mateo, California-based Roblox’s listing plans comes in the wake of a $150 million funding round in February wherein it was valued at $4 billion in a Series G funding round which was led by venture capital firm Andreessen Horowitz.
At the time of the fundraising announcement, Roblox said it had reached more than 115 million monthly active users and more than 1.5 billion hours of monthly engagement.
Roblox’s platform offers a host of different games across mobile devices and games consoles. It operates a freemium model where users can make in-game purchases.
Roblox’s public listing would follow that of gaming platform Unity Software Inc whose shares have risen more than 60% since it went public last month.