Roblox, an online gaming platform, announced today that it has filed a confidential draft S-1 registration statement with the Securities and Exchange Commission (SEC), the first step toward an initial public offering (IPO) of its stock. Due to the confidential nature of its filing, the filing isn't yet available for review, but the company could go public as soon as early next year.
As a result of the pandemic, many consumers have turned to home entertainment and video games to pass the time. Roblox believes it could achieve a valuation as high as $8 billion, more than double the $4 billion it fetched in a recent round of fundraising on the private market.
In addition to its games, Roblox offers tools to developers to help create games on its platform. The company announced in July it had 150 million monthly active users. In addition, it revealed that more than 2 million creators on its platform were on pace to earn roughly $250 million in 2020, up from $110 million in 2019.
Popular games on Roblox's platform include Adopt Me!, a game that features digital pets that had garnered 10 billion sessions through July, and Piggy, which launched earlier this year and had notched nearly 5 billion plays during the first six months after its debut.
Roblox management has yet to decide if the company will go public using a traditional IPO, or if the company will use the alternative direct listing to make its debut.
The direct public listing (DPO) offers several advantages for companies choosing this option. The company takes on a number of tasks typically performed by investment bankers, potentially saving millions of dollars in the process. Additionally, the shares sold come from existing shareholders with no new stock offered for sale, preventing the dilution that accompanies a traditional IPO. This allows insiders, employees, and existing shareholders to reap the benefits from selling their stock.