Roblox halts its Stock Market Listing amid SEC Scrutiny
Roblox Corp has once again decided to delay its plan to go public amid some reservations put forward by US Security and Exchange Commission.
Yet another setback and a disappointing delay as Roblox still haven’t gone public as many are eagerly waiting for its shares. United States Security and Exchange Commission has reservations that revolve around the in-game currency Robux and the way in which revenue from Robux is recognized by Roblox. SEC is interested and investigating the allocation of revenues which isn’t clear enough for it as of now.
Previously, Roblox planned to go public in New York Stock Exchange in the Q4 of January. However, in an SEC filing on the 8th of January, Roblox Corp decided otherwise and changed its plan to a direct listing following the likes of Spotify and Slack. The direct listing was due to take place in February but that is not the case now.
Roblox Corp now values to a massive $29.5 billion after a funding round earlier this month. The funding round raised $520 million which was led by Dragoneer Investment Group and Altimeter Capital. This is an impressive growth when compared to last years’ $4 billion. This growth has a lot to do with the global pandemic; during lockdowns, video games’ popularity surged throughout the world.
The main issue that SEC is investigating is about Robux which players use to purchase durable and consumable goods. Durable goods last for a certain time and consumable goods on the other hand are used immediately. Roblox’s plan was to treat all revenue as the same but SEC wants Roblox Corp to recognize profits on consumable products as they are consumed.
As per a memo written by David Baszucki, “By adopting that accounting position, our revenue will actually be a bit higher, while bookings, DAUs (Daily Active Users), hours of engagement, and cash flow will not change.” He further added, “It will, however, take us some time to update this change in our financial statements.”
Many are eagerly waiting for Roblox Corp to go public as the company is showing a steady growth trajectory. The daily active user base of Roblox has witnessed an increase of 82% and the total now tallies to 31.1 million in nine months.