Categories Technology, U.S. Markets News

These 2 tech startups may follow Spotify’s method of direct listing over IPO in 2019

When Spotify (SPOT) opted for an untraditional method of direct listing in April, it raised quite a few eyebrows. Shareholders and the company management were barraged with questions, while many market observers remained skeptic over the consequences of a larger tech startup opting for this method.

However, the public listing turned out to be a success, with shares closing 12% higher than its reference price. Following the public listing, the Swedish company was valued at approximately $26.6 billion and the shares stabilized, unlike what was expected by some critics.

Picture Courtesy: Spotify

Though the hullabaloo around direct listings had died down since then, two popular tech companies may be opting this method next year. According to Recode, Airbnb and Slack may go for direct listing, though there has not been an official confirmation.

Direct listing is the method where pre-existing shares owned by shareholders, employees or promoters are offered to the public without the help of intermediaries including underwriters, investment banks or broker-dealers.

The elimination of middlemen helps in saving underwriter charges and other fees but comes with its own set of risks. There would be zero promotions and the listing stands vulnerable to high stock volatility.

Airbnb, which was last valued at $30 billion, is likely to go public by the end of next year or in early 2020. The company’s CEO Brian Chesky had reportedly met Spotify chief Daniel Ek a few months back to discuss direct listing.

Tencent Music files for IPO today as trade war put on hold at G20 Summit

Meanwhile, Slack is also mulling public listing, Recode reported. The enterprise workplace messaging company, only days ago, had hired Goldman Sachs to help with its public listing, though nothing is yet confirmed. The company, which has 8 million in DAU, is likely to go public in the second half of next year.

On the other hand, the two ride-hailing companies – Lyft and Uber – which had filed for public listing last week, will probably opt for the traditional IPO method.

 

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference, and much more!

Most Popular

IPO Alert: Here’s what to look for when CaliberCos goes public

The massive slowdown in the IPO market continued in the second half as the challenges posed by high inflation and interest rate hikes weighed on investor confidence. Meanwhile, there is

CarMax (KMX) Stock: Does the current dip offer a buying opportunity?

The automotive sector is one of the worst affected by the combination of high inflation and rising interest rates. Consumers have become more cautious and are prioritizing their purchases with

Ultimax Digital gears up for $10mln IPO. Here’s all you need to know

The IPO market has witnessed muted activity this year, and things don’t seem to have improved in the second half. The upcoming public listing of video game technology firm Ultimax

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top