Whatâs Going On Here?Roblox isnât just keeping the kids entertained: the gaming platform listed on the stock market on Wednesday, and excitable investors couldnât wait to start playing (tweet this). What Does This Mean?Roblox was supposed to go public last year, but the company hit pause after Airbnb and DoorDashâs stock prices jumped following their initial public offerings (IPOs), suggesting theyâd sold their shares too cheaply. Then, in January, the company announced itâd instead let investors themselves set its share price via a âdirect listingâ. So when Roblox debuted on the stock market on Wednesday, investors initially priced its shares at just under $70 apiece â much higher than the so-called âreference priceâ of $45, and potentially vindicating the companyâs decision. Why Should I Care?For markets: Direct listings might not work out for everyone.
In an IPO, itâs banks that set the starting price of a stock. If investors think that price is too low, theyâll pile in and cause an early â and nowadays much-expected â spike in the share price. A direct listing, meanwhile, allows investors to make their own decisions about the price theyâre willing to pay up front, which typically means a smaller day-one rise (if any at all). That could work against Coinbase when its direct listing arrives, mind you: drama-hungry cryptocurrency investors might be hoping for more fanfare around one of the leading crypto exchanges.
For markets: ⌠but theyâre only going to get more popular.
Direct listings give retail investors a way to buy newly listed shares at the same time as institutional heavy-hitters, and there might be a lot more to come. See, companies havenât historically been allowed to raise money from a direct listing, forcing those that wanted to shore up their bank balances to opt for an IPO. But that ruleâs just changed: companies can now list directly and raise money â and if Robloxâs success is anything to go by, plenty more will. | 