There are issues in there, namely that the price discovery mechanism has proved to be uncertain, especially when it comes to the public offerings of companies considered attractive investments by the active retail trading market. That is a traditional IPO, admittedly simplified. The next morning, your shares begin to trade, and you count the money you raised. One way to go public is to file an S-1, prepare a presentation, go on a roadshow, drive interest in your shares and work with bankers to price the shares you want to sell at a dollar amount all parties can agree to. Why is the company raising private market money and then floating instead of raising public market money on its path to trading as a public company? And does its strategy solve the major flaws that the IPO process appears to have? Let’s get into it. This morning, let’s talk about Roblox’s flotation strategy. But it’s hard to fret heavily about private-market complaints concerning startup value when the IPO facilitators are hardly the only folks making trips to the bank with a wheelbarrow.Īll that is preamble. Perhaps Roblox was right to hold off on its IPO, raise a huge block of cash at a new valuation and pursue a direct listing. The same company at its new $29.5 billion valuation is now priced at just over 30x its Q3 2020 run rate (the most recent quarter for which we have data today). But there’s a lot of space between $4 billion and $29.5 billion, and recall that its February Series G valued Roblox at around 7.3x its Q4 2019 revenue run rate. Sure, you could argue that Roblox enjoyed an epic 2020, thanks in part to COVID-19. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.įor all the griping amongst private-market capitalists that public-market capitalists are ripping off their investments as they look to cross the private-public divide through an IPO, it’s hard to square a company’s valuation going from $4 billion to nearly $30 billion in just 11 months. The Exchange explores startups, markets and money. That’s the lesson the market learned this week when the gaming platform company announced that it had raised $520 million in an epic Series H.įor a company valued at just $4 billion last February when it raised $150 million in a round led by Andreessen Horowitz, that new valuation could be considered a victory. So it turns out that Roblox is worth $29.5 billion.
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