Time to Back Slack?
Team collaboration app Slack took its direct listing to the NYSE on 20th June, with the aim of using the funds raised to drive its continued global growth.
The company had 144 million of its members signed up to potentially take part, meaning it could go direct to the consumer instead of going to market with a traditional IPO.
The company is still unprofitable, but in line with other fast-growing tech listings such as Uber, this did not deter investors on the first day of trading.
Most analysts had expected slack to open at a price of around $28, up from an estimated $11.99 in August 2018.
On its first day of trading, however, Slack outperformed expectations, opening at $38.50. It achieved a high of $42 in its first session but closed just above the opening mark at $38.62.
What is a direct listing?
Direct listings are market events that allow shares to be sold directly to the public without any intermediaries, such as underwriters. They can be seen as a less expensive method of a company going public, but there are downsides too.
Unlike an IPO, there is no guarantee for the share price, generally fewer long-term or institutional investors and no promotion of the event through third parties. This can potentially lead to heightened price volatility in early trading.
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