[January 10th, 2021]
Roblox announced few days ago that it raised $520 million in new Series H funding at $29.5 billion valuation and planned to pursue an IPO via direct listing in early February 2021.
It’s management team’s job to maximize the valuation for existing stockholders. By withdrawing from IPO and then raising a private round, Roblox as a company got the liquidity it wanted and its existing shareholders got a valuation they thought satisfactory. In addition, direct listing will increase the likelihood that existing shareholders can timely capture the attractive valuation since none of their shareholders are party to any contractual lock-up agreement or other contractual restrictions on transfer.
No doubt this setup is great for selling shareholders. The series of transactions will be considered as one of the best trades in this run and be written as case study. As a potential buyside of the share in the first trade, you are providing liquidity at a valuation with interesting trajectory to existing shareholders who are long-term, savvy and informative.
In current environment, it’s unwise to suggest avoiding any stock. That being said, you can avoid the disadvantage setup by not being the first trade. Sometimes patience and discipline pay off but stonks might only go up. I don’t know ¯\_(ツ)_/¯.