Roblox delays Reddit ‘meme stock’ status as direct listing pushed back to March
Roblox Corp, an online platform that allows users to create and play video games, could be the next company on Reddit’s ‘meme stock’ list when it floats on the New York Stock Exchange (NYSE) next month.
Overnight, the company, which derives most of its revenues from in-game purchases and subscription premium services, said it had pushed back its direct listing on the NYSE to March from February, having originally filed plans for a US$1bn initial public offering (IPO) back in November. However, in January, the company raised funds from private capital which gave it a valuation of just under US$30bn and re-filed its documents with the exchange to target a direct listing instead.
A direct listing means existing shares in a company are floated on a stock exchange with no underwriters or intermediaries involved, as opposed to an IPO when new shares are created, underwritten and sold to public investors.
Despite the listing delay, Roblox may have helped drum up investor interest with revisions to its results for the first three quarters of 2020, which saw its net loss for the period narrowed to US$194.5mln from the US$213.3mln previously stated, while revenues were also revised upward to US$613.9mln from US$588.7mln.
Over the same period, the company reported that its daily active user base had increased 82% year-on-year to 31.1mln, with hours engaged up 122% to 22.2bn.
To many on the internet, Roblox will not be associated as an investment opportunity but rather a deep trove of ‘memes’, online images, audio, video, or other media that often share jokes, ideas, behaviour or events through online forums, particularly social media.
Following the news of the listing delay, Roblox attracted the attention of some on now-infamous Reddit forum r/wallstreetbets, which is widely credited with starting the unexpected surge in the share price of video game retailer GameStop Corp (LON:GME) last month, ostensibly in a bid to inflict heavy losses on institutional short-sellers betting against the stock.
The forum also caused similar upswings in other companies deemed to be the target of short-sellers, particularly cinema chain AMC Entertainment Holdings Inc (NYSE:AMC) and phone maker BlackBerry Ltd (LON:NYSE:BB), with several cannabis stocks also receiving a bump earlier this week amid chatter on the forum.