BROWSE BY TOPIC
Stories of Interest
- Wells Fargo Has Shown Us Its Contemptible Values
- UBS to Counter Trading Troubles With M&A Work
- SEC Moves Quickly To Shut Down Fake Pre-IPO Share Scam
- SEC Testimony: Oversight of the SEC Division of Enforcement
- FINRA Modifies 'Agency Debt Security' in Rule 6710
- Is Jamie Dimon Doing a U-Turn on Bitcoin?
- After New Yorker's Racist Rant Goes Viral, His Law Firm Gets Pummeled with 1-Star Yelp Reviews
- Bill O’Donnell is New CFO at MetLife
- Trump Still Owes Deutsche Bank, Others as Much as $480Mn
- Wells Fargo Scandals Hurt Its Retirement Business
- Michigan State to Pay $500Mn to Victims of Larry Nassar's Abuse
- Top Lawyer at Novartis Leaving Over $1.2Mn Contract with Michael Cohen's Consulting Firm
- Cadwalader Adds Mark Chorazak to its Financial Regulation Practice
- Deutsche Bank: It's A Short According to Eisman of ‘The Big Short’ Fame
- Up In Smoke: Bank of Montreal Goes All-In on Pot Deals
- RBS to Pay $4.9Bn to Settle Toxic MBS Probe with U.S.
- Apple and Goldman Sachs Team Up to Release New Credit Card
- Robinhood, A Stock, Trading App Rejected by 75 Investors, Now Worth $5.6Bn
- Wells Fargo Reportedly Pocketed Fire And Police Department Pension Fund Fee Rebates
- Trading App Robinhood Surpasses E*Trade In User Numbers
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Wall Street News
Spotify to Go with Direct Listing, Not IPO - The Wall Street Impact
by Howard Haykin
Spotify, that popular music streaming service valued at $13 billion, announced intentions to go public. Tremendous payday for Wall Street investments bankers, yes? NO.
Instead of an initial public offering (IPO), Spotify is considering a ‘direct listing’ – which is, what???
In such a deal, Spotify would likely issue no new shares. It wouldn’t have to hire an underwriter. Existing shareholders won’t pre-sell any of their shares to new investors. No lock-up periods or dilution for shareholders. Rather, shares will simply begin trading at their current levels – presumably on the NYSE. The company is consulting with Morgan Stanley, Goldman Sachs, and Allen & Co. on the process.
A direct listing would save Spotify investment banking fees, and it will enable Spotify to sell its shares at their true market value – not at some artificially low price set by the lead underwriters. It’s a faster, easier and cheaper route to the same route as an IPO.
A direct listing, however, carries some risks. Shares may carry a connotation of not conforming to Wall Street standards – which may be construed as something of a negative. Spotify management may have to work harder to persuade shareholders to make a long-term investment – something that underwriters would do during the typical dog-and-pony shows. And, without underwriters providing deal support, there’s no guarantee of a nice day-one pop – which is crucial for high-profile listings of consumer tech brands like Spotify. [Click here for Fortune’s take on the risks.]