The popular music streaming service Spotify issued shares to the public on April 3rd via a direct listing rather than an IPO. Not sure what the difference is? Here's an explanation from CNBC:
The music streaming service is forgoing a traditional initial public offering and skipping the marketing roadshow and share-price setting process that goes with it. Instead, the opening public price of its ordinary shares on the New York Stock Exchange will be determined by buy and sell orders collected on the day it lists, the company said Wednesday in a registration filing with the U.S. Securities and Exchange Commission.
Since Spotify is skipping the traditional marketing roadshow and share price discovery process essential to an IPO, investors will be left only to closely read the 264-page document when making the decision to buy -- or not. Spotify included a placeholder amount of $1 billion in the listing for calculating fees, though it’s unknown how many shares will change hands when it lists.
For financial markets, this is pretty crazy. If it's successful, other tech firms (like Uber, Airbnb) may follow suit. If it's not successful, we're not likely to see another direct listing for some time.
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