How Does A Direct Listing Work?

The direct listing process, also known as a direct public offering (DPO), is a way for companies to be listed on a public market by directly selling shares outside of a traditional offering to investors. The shares are priced by the issuing company without the help of investment bankers (which saves tens of millions in fees) and sold with the assistance of a commission broker. The recent move by Swedish-based music streaming company Spotify to complete a multi-billion dollar direct listing introduces a new threat to the underwriting industry.

In this video, I talk about the existing rules surrounding DPOs and compared the benefits and risks of such an issue with the traditional IPO method. The following questions will be answered;

- What are the benefits of a direct listing?
- Is Spotify’s direct listing a good idea?
- How does a bought deal work?
- Why do companies sell shares through an IPO?
- Is the IPO business corrupted?

To learn more about the Spotify direct listing, consider reading the articles below.

If you have any other questions, please comment below. If you enjoyed the video and found it helpful, please like and subscribe to FinanceKid for more videos soon!

For those who may be interested in finance and investing, I suggest you check out my Seeking Alpha profile where I write about the market and different investment opportunities. I conduct a full analysis on companies and countries while also commenting on relevant news stories.

[xiaolang]

this is the best youtube video dat explains DPO

[RubenBoutboul]

Well detailed and explained, thanks !

[michellema]

Very helpful materials. Thanks for uploading. Looking forward to seeing more.

[justinknash]

Thanks for this explanation. With the imminent direct listing of Slack, I'd love to see another video about its DPO and your thoughts.

[viacheslavsavateev]

What if you have pitched an issue, funds said they would buy at $X and then they eventually wouldn't go ahead and buy on the IPO day?

[cryptologic]

If a company does a DPO and they do it on a OTC exchange retail investors will still not be able to participate right?

[carselljones]

Secession scor management offering what about it

[Piloyt]

Where did you find those data about direct listings completed in the last decade? I'm doing a research about it, but I'm struggling to find exhaustive data.
P.s. Great video! Keep it up :)

[yusufalghareeb]

for a direct listing, what will be the broker fee ?

[Tytheentreprenuer]

So the price can drop when this happens correct